FOREX-Kiwi sinks as cenbank signals rate halt, China PMI lifts Aussie
* NZ dollar falls sharply after RBNZ sounds less hawkish
* Strong China PMI lifts Aussie to 3-week high vs dollar
* Euro languishes near 8-month low, eurozone PMI eyed (Adds details, quotes)
By Shinichi Saoshiro and Ian Chua
TOKYO/SYDNEY, July 24 (Reuters) - The New Zealand dollar skidded to a six-week low on Thursday after the country's central bank switched to a wait-and-see stance following its fourth straight rate hike, while its Australian peer rose after a survey showed China's factory sector expanded at its fastest pace in 18 months.
The kiwi dollar dropped nearly a full U.S. cent, touching levels not seen since June 12.
The Australian dollar, often used as a proxy for the economic performance of China, touched a three-week high of $0.9480 and last traded at $0.9463.
The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose to 52.0 in July, its highest since January 2013 as the impact began to be felt from a raft of government stimulus measures.
The euro lingered close to an eight-month low of $1.3454 struck earlier in the session, with traders expecting the currency to take a fresh knock if the eurozone July PMI due at 0800 GMT proves disappointing.
The euro has struggled to find support amid persistent expectations for further monetary easing in the euro zone and a gradual widening of interest rates favouring the U.S. over Europe.
"Long positions in the pound and antipodean currencies were unwound at the height of concerns towards tensions in the Ukraine, but such moves are winding down with the market now more immune to geopolitical risk," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.
"Under such conditions participants are opting again for the pound, Aussie and dollar, which could benefit from the next round of economic indicators. This leaves the euro as the sole bear currency," he said.
Against the yen, the U.S. dollar firmed slightly to 101.54 , continuing to recover slowly from last Friday's low of 101.09. The pair showed little reaction to data that showed Japan's exports unexpectedly falling in June.
The euro was little changed at 136.67, having reached a near six-month trough at 136.41 on Wednesday.
The Reserve Bank of New Zealand (RBNZ) raised its cash rate by 25 basis points to 3.5 percent early on Thursday but pushed the pause button, saying the economy appeared to be responding to higher rates as intended.
The move was not a complete surprise given many have been questioning the need for more tightening in the face of a high currency, restrained inflation and falling dairy prices, the country's biggest export earner.
Yet the reaction in the kiwi was swift with investors knocking the currency from around $0.8703 to as low as $0.8598. It last traded at $0.8611.
"Perhaps the main surprise was the language regarding the high NZD exchange rate. 'There is potential for a significant fall' opens to interpretation as a veiled intervention threat," said Imre Speizer, senior strategist at Westpac in Auckland.
Analysts at Citi said it is unusual for a central banker to make such blunt comments about the currency and showed a high level of frustration with the strong kiwi. (Editing by Michael Urquhart)