(Updates prices, adds more market comment)
* HSBC China PMI rises to 50.8 in June from 49.4 in May
* Canadian dollar extends gains after inflation shock
* Euro held back by Draghi comments, poor euro zone data
By Patrick Graham
LONDON, June 23 (Reuters) - Optimism over China's economic prospects drove the Australian, New Zealand and Canadian dollars higher on Monday, while the euro struggled to make headway after some softer business- sentiment surveys.
HSBC's monthly survey of purchasing managers pointed to the first expansion in six months by China's manufacturing sector, which is crucial to the world's growth prospects and demand for a wide range of commodities.
That offered relief to investors fretting about the health of Australia's biggest export market. The Aussie rose as high as $0.9445, near its April 10 peak of $0.9461.
The Canadian dollar also reached a five-month high, building on gains from Friday, after surprisingly high inflation and robust retail sales made it look less likely the central bank would maintain its accommodative policy stance.
"There has just been a bit of a risk-on play this morning," said Stephen Gallo, head of European currency strategy at Canadian bank BMO in London. "The Aussie, kiwi and Canadian dollar all look wrapped up in that."
Gallo said "short" bets on a weaker Canadian dollar - a popular trade over the past year - had been squeezed after the inflation numbers last week.
"I wouldn't advise going short here yet, but the move in spot does look mainly like the result of positioning and contrary to the long-term drivers for the (Canadian) dollar."
The Canadian dollar was last around C$1.0724 per U.S. dollar , after touching a high of C$1.0717.
Purchasing manager surveys for Germany, France and the euro zone as a whole were all below forecast and the euro inched down 0.1 percent to $1.3584 in response.
The trend, however, remained the same: robust growth in Europe's biggest economy and a continuing struggle for some of its neighbours.
The data followed a weekend interview in which European Central Bank chief Mario Draghi laid out the case for sticking with the bank's current programme of stimulus. He also said outright quantitative easing could be used if inflation expectations deteriorated in the medium term.
That left markets about where they have been all year: waiting for a stronger signal of a move away from the era of ultra-low interest rates. Those low rates have left currency-market volatility at record lows and volumes with it.
"Although we think it will prove a very interesting summer for the FX markets, the action is likely to be away from euro-dollar or yen-dollar," Bank of New York Mellon analysts said in a note. "We suspect that sterling and the Canadian dollar could see some interesting moves against a range of currencies."
Against the yen, the dollar was 0.2 percent weaker at 101.84 yen.
The British pound was almost unchanged, trading at $1.7024 after hitting a 5 1/2-year high of $1.7064 last Thursday on speculation the Bank of England would raise interest rates before the end of this year. (Editing by Larry King)