* CAD, AUD, NZD outperform G3 peers after upbeat China PMI
* USD, EUR and JPY still searching for inspiration
* Japan to announce more 'Third Arrow' policies
By Ian Chua
SYDNEY, June 24 (Reuters) - The dollar-bloc currencies held onto gains early on Tuesday, having outperformed their G3 peers on optimism about Chinese growth and as the market prepared for Japan to deliver its latest instalment of long-term economic policies.
The Canadian dollar traded at C$1.0727, not far from a 5-1/2 month peak of C$1.0717 per U.S. dollar. Both the Australian and New Zealand dollars were at $0.9425 and $0.8714, having hit multi-week highs of $0.9445 and $0.8749 on Monday.
All three currencies had risen after a closely watched survey on Monday showed activity in China's factory sector expanded in June for the first time in six months as new orders surged.
Gains in the Canadian dollar followed Friday's rally sparked by upside surprises in local inflation and retail sales data.
"Our proprietary positioning indicator is suggesting market has flipped to a long CAD bias for the first time since early 2013," BNP Paribas analysts wrote in a note to clients.
"Given the scope for a less dovish Bank of Canada announcement and Monetary Policy Report next month, we see scope for further CAD gains, particularly against EUR and AUD."
In contrast, the G3 currencies were stuck in familiar ranges with investors discounting the latest readings on euro zone, U.S. and Japanese manufacturing activity given the dovish stance taken by all three major central banks.
The euro was last at $1.3602, having traded on either side of $1.3600 in the past few sessions. Against the yen, the common currency stood at 138.60, while the dollar fetched 101.89.
That left the dollar index little changed at 80.270, well within 80.000-81.000 seen since May.
Japanese Prime Minister Shinzo Abe will on Tuesday detail his so-called "Third Arrow" policies including phased corporate tax cuts, public pension reforms and proposed dance hall deregulation.
Given that many have already been leaked or announced by officials, the risk is that the measures are likely to receive a lukewarm response from investors. Still, the market will be keen to see how they are fleshed out and implemented.
There are no major economic data scheduled for release in Asia on Tuesday, leaving the focus squarely on Abe's announcement. (Editing by Shri Navaratnam)