* Australian dollar rises 1.6 percent vs U.S. dollar
* Strong Australian growth boosts risk sentiment
* But safe-haven demand for Swiss and yen may continue
(Adds comment, details, updates prices)
By Neal Armstrong
LONDON, Sept 1 (Reuters) - The dollar fell versus a basket
of currencies on Wednesday as upbeat data from China and
Australia revived shaky equity markets and gave a boost to risk
sentiment.
Australia's economy grew at the fastest pace in three years
in the second quarter as households spent far more than expected
while exports enjoyed an Asian-driven boom, reviving the risk of
a further rise in interest rates and leading to a surge in the
Aussie dollar <AUD=D4> []
"The Aussie seems to be driving things on the day. There's a
bit of optimism in the market and the risk-on currencies are
benefiting," said Paul Mackel, director of currency strategy at
HSBC.
Other data showed Chinese manufacturing staged a moderate
rebound in August, easing concerns about the pace of global
growth that are based on weakness in the United States.
At 1115 GMT, the Australian dollar was trading at $0.9055,
up 1.6 percent on the day and its highest in two weeks. European
stocks were up 1.2 percent <>, with U.S. stock futures
pointing to a positive open <.SPc1>.
The Aussie's rise contributed to a 0.8 percent fall in the
dollar versus a currency basket to 82.60, down from a 6-week
high hit last week at 83.559.
The euro <EUR=> rose roughly 1 percent to $1.2810. Traders
said Asian demand had triggered stop-losses at $1.2710, while a
large option expiry at $1.2800 was also highlighted, potentially
having a magnetic impact on the currency.
Some market participants said the strong data from Australia
and China had given the chance for investors to cut short
positions in higher-risk currencies including the euro and the
Australian and New Zealand dollars.
"The market has taken out those (short) positions, I think
it's probably neutral now," said a trader in London.
Given the market's positioning, he added that very weak
readings in U.S. ADP employment data due at 1215 GMT and the
ISM's reading of U.S. manufacturing at 1400 GMT, may spark
another round of selling in higher-risk currencies.
Analysts said that while Wednesday's data had offered a
reprieve to riskier currencies, any rallies would be short-lived
as they would likely be met by selling, while currencies
perceived to be safe-haven, including the Swiss franc and the
yen, would continue to rise.
The euro <EURCHF=> rose 0.8 percent to 1.2976 francs,
recovering from a lifetime low versus the euro hit on Tuesday at
1.2850 francs on trading platform EBS. The Swiss franc eased
across the board after a broad rally the previous day.
Still, it rose to 1.0125 francs per dollar <CHF=>, its
highest since December 2009, as the U.S. currency suffered
against most major currencies.
The dollar <JPY=> slipped 0.2 percent to 84.00 yen, while
the euro was up 0.6 percent at 107.45 yen <EURJPY=R>.
EYES ON JAPAN
The dollar pulled back from the day's high of 84.58 yen and
remains within shouting distance of a 15-year low of 83.58 hit
on EBS last week.
Dollar/yen hit the day's high after Japanese ruling party
powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan
in a party leadership vote, said he would implement steps
including intervention if the yen rose sharply. []
Ozawa, in a showdown with Kan in the Sept. 14 vote for
ruling party leader and hence prime minister, has a strong
political base within the ruling Democratic Party that could
threaten Kan's position. []
Many traders and analysts believe the dollar's recent drop
against the yen, largely driven by falling U.S. bond yields,
would have to turn much more volatile or deeper for Japanese
authorities to take action on the currency.
(Additional reporting by Naomi Tajitsu; editing by Stephen
Nisbet)
