* Euro up 0.3 pct at $1.4768 <EUR=>; U.S. ISM eyed
* Sterling tumbles on UK bank sector concerns
* Aussie up ahead of expected RBA rate hike
(Releads, adds quotes, updates prices)
By Tamawa Desai
LONDON, Nov 2 (Reuters) - The euro rose against the dollar
on Monday as risk-averse sentiment eased on improved economic
data and as stocks pared losses, but markets remained skittish
before key central bank events and U.S. jobs data this week.
European stock markets shed losses made at the outset on
news that CIT Group Inc <CIT.N>, a U.S. lender to hundreds of
thousands of small and medium-sized businesses, filed for
bankruptcy on Sunday. []
Market sentiment was also buoyed after data confirmed an
expansion in euro zone manufacturing activity. Final euro zone
manufacturing purchasing managers' index for October rose to
50.7 in October from 49.3 in September - in line with an earlier
flash estimate and economists' forecasts.
It was the first time the reading has been above the 50.0
mark that divides growth from contraction since May 2008 and its
highest level since April 2008 when it also stood at 50.7.
[]
"Today's data suggest that the recovery in the euro area is
starting to gather pace," said Colin Ellis at Daiwa Securities.
The euro rose as high as $1.4796 <EUR=>. By 1237 GMT, it was
up 0.3 percent at $1.4768.
The single currency also hit the day's high against sterling
of 90.37 pence <EURGBP=R>, as the pound was hit, with the
government set to finalise plans this week to carve up rescued
banks Royal Bank of Scotland <RBS.L> and Lloyds <LLOY.L>,
triggering selling in their shares. []
The UK currency is sensitive to news about the country's
struggling banking system given the economy's heavy dependence
on its financial sector, and a rise in UK manufacturing PMI data
failed to boost the currency.
Meanwhile, the yen reversed gains made early in Asian hours,
with traders citing an earlier very low trade in South African
rand against the yen, which had a knock-on effect on all yen
pairs.
The Japanese currency had risen as high as 89.18 yen per
dollar on electronic trading platform EBS before falling to
around 90 yen <JPY=>.
Data also showed China's manufacturing sector expanded at
the fastest pace in 18 months in October. []
But investors remained cautious before a slew of events
later in the week, including monetary policy decisions in the
United States, the euro zone and the UK.
The U.S. jobs report for October is due out on Friday and
Group of 20 finance officials will meet at the weekend. G20
sources said on Monday foreign exchange rates were not expected
to be a major topic but could be discussed in the context of
global rebalancing. []
"The market is quite thin and there are a lot of big events
coming up, a lot of risk news flow. Ahead of that we are likely
to get some position-switching after Friday's month-end fixes
saw the dollar and the yen well bid," said Peter Frank, currency
strategist at Societe Generale in London.
The Australian dollar strengthened as the market fully
anticipated the Reserve Bank of Australia will raise key
interest rates on Tuesday by 25 basis points to 3.5 percent,
with some chance of a 50 bp rise. []
The Aussie dollar was up 0.6 percent at $0.9048 <AUD=>.
Attention turned to the release of the latest U.S. ISM
manufacturing survey at 1500 GMT, expected to show expansion in
the sector for the third month in a row. <ECONUS>
(Additional reporting by Jessica Mortimer; editing by Stephen
Nisbet)
