* Rebound in Chinese manufacturing drives risk appetite
* Yen falls slightly, kiwi rises
* Pound drops as polls show tighter UK election race
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Westbrook
SINGAPORE, Dec 2 (Reuters) - The Japanese yen hit a
six-month low on Monday as investors cheered an unexpected
rebound in Chinese manufacturing, while a tightening British
election race knocked the pound.
The safe-haven yen JPY= fell 0.2% to 109.72 per dollar,
its lowest since May, and riskier currencies rallied after two
surveys showed Chinese factory activity expanding. Sterling GBP=D3 was down a quarter of a percentage point
at $1.2913 as a clutch of polls pointed to a sharply narrowing
lead for the Conservative Party ahead of the Dec. 12 election.
Gains were led by the kiwi, which put on 0.6% against the
yen to hit its highest since August NZDJPY= and rose 0.3% on
the greenback NZD=D3 to buy $0.6444, its strongest in a month.
"S&P futures are up, there's a risk-on mood," said Jason
Wong, senior market strategist at BNZ in Wellington.
China's factory activity expanded at the quickest pace in
almost three years in November, a private business survey showed
on Monday, following upbeat official data over the weekend.
The Caixin survey also showed total new orders and factory
production at buoyant levels.
Even a report from news website Axios, citing a source close
to the U.S. negotiating team, saying that tensions in Hong Kong
had stalled Sino-U.S. trade talks was not enough to dent the
sentiment.
"The market is taking it with a degree of salt, waiting for
clarity," said Rodrigo Catril, senior FX strategist at National
Australia Bank in Sydney.
"We keep on getting these unofficial statements," he said.
"No-one is going to be taking major positions until we get more
clarity on the trade front."
China warned the United States last week it would take "firm
countermeasures" in response to U.S. legislation backing
anti-government protesters in Hong Kong, but has yet to offer
any details.
The trade-sensitive Australian dollar AUD= headed for its
biggest percentage gain in two weeks, added 0.2% to $0.6774. The
greenback held steady against the euro EUR= at $1.1017 and
against a basket of currencies .DXY at 98.319.
The possibility of further monetary easing in China - and
the lack of firm news on trade - kept the yuan CNY= on an even
keel at 7.0301 per dollar.
The next focus will be on manufacturing surveys in Europe
and the United States later in the day.
"These things tend to move in unison," said Matt Simpson,
senior market analyst at Gain Capital in Singapore.
"So if we got a positive readout from China, it's quite
likely we'll get positive reads from Europe later today, in
which case you're looking at long euro," he said.
"You'd only have to come a tick or two higher above
expectations and you've got upside, arguably, for the euro."
(Editing by Jane Wardell and Jacqueline Wong)