FOREX-Euro drops after euro zone data highlights division
* Euro slips after Spanish PMI
* UK manufacturing data pushes euro to 11-mth low vs sterling
* Aussie and New Zealand dollar rise on Chinese data
By Anirban Nag
LONDON, Dec 2 (Reuters) - The euro fell against the dollar and hit an 11-month low against the British pound on Monday after data showed euro zone growth was still vulnerable to downturns in countries like France and Spain.
The euro shed 0.5 percent to $1.3516, retreating from Friday's one-month high of $1.3622. It hit its lowest since early January against sterling of 82.53 pence per euro after UK manufacturing data bolstered expectations of a earlier than expected tightening by the Bank of England.
The eurozone manufacturing PMI rose to 51.6 last month from October's 51.3, just pipping an earlier flash reading of 51.5. But France's PMI sank to a five-month low of 48.4 from 49.1, while Spain's manufacturing sector shrank.
"The data highlights that the euro zone recovery is levelling off," said Alvin Tan, currency strategist at Societe Generale. "We would like to sell the euro against the dollar at rallies, but where we expect more action is the euro/sterling cross. We would add short euro positions against the pound."
The euro's losses saw the dollar index recover to trade 0.3 percent higher at 80.919. The dollar also rose to a more than six-month high against the yen of 102.895 yen.
The yen continued to struggle after falling more than 4 percent in November against the dollar and euro. Investors have been selling the low-yielding yen to buy riskier assets in carry trades made attractive by the Bank of Japan's ultra-loose monetary policy.
BOJ Governor Haruhiko Kuroda said on Monday that he would not hesitate to adjust policy, fanning speculation the bank could take more easing steps next year.
AUSSIE AND KIWI RISE
The growth-linked Australian and New Zealand dollars also rose following positive data from China.
A survey on Sunday showed China's factory growth held at an 18-month high in November, an outcome that was slightly ahead of expectations. Both Australia and New Zealand are highly leveraged to China's economic cycle.
Sentiment was buoyed further after a similar Chinese private manufacturing survey published on Monday was revised up from preliminary reading.
The Aussie rose 0.4 percent to $0.9135 while the kiwi advanced 0.8 percent to $0.8185.
"The Aussie has been helped by the Chinese data and we think there is still some scope for it to gain, given that we expect the dollar to stay slightly softer," said Paul Robson, currency strategist at RBS.
The Reserve Bank of Australia's rate setting committee meets on Tuesday, and investors will keep an eye on whether the central banks shows its discomfort with the level of the Australian dollar.