Australian and NZ dollars hindered by weak Chinese data

* Aussie off 4-month peak vs yen

* Kiwi eases from highest since Oct vs USD

* Upbeat manufacturing data supports NZD

By Cecile Lefort and Naomi Tajitsu

SYDNEY/WELLINGTON, March 10 (Reuters) - The Australian and New Zealand dollars were off multimonth highs against their U.S. counterpart and the yen on Monday after disappointing economic data in China fuelled worries about a slowdown in the world's second-biggest economy.

The Aussie AUD=D4 slipped to $0.9035, having touched a three-month high of $0.9135 on Friday.

Figures released over the weekend showed a surprisingly sharp drop in exports that tipped China's trade balance into a deficit, while inflation cooled to its slowest pace in 13 months. ECONCN

The Australian dollar is seen as a proxy of Chinese growth because of the countries' strong trade links. China is Australia's top export market.

Still, the Aussie is up 1.4 percent so far this month, as stronger-than-expected Australian data pointed to the economy feeling the benefit of low interest rates.

At its policy review last week, the Reserve Bank of Australia kept rates at a record low of 2.5 percent, saying the most prudent course was likely a period of stability.

The recent jump in the Aussie is far from pleasing the central bank, which has long favoured a lower currency to help support the economy.

Support for the Aussie is seen around $0.9000, with resistance at $0.9070.

The next flash point on the home front is labour data on Thursday, with 18,000 jobs expected to have been added in February. ECONAU

The Aussie was also off multimonth peaks against the yen and the Canadian dollar. It was last at 93.19 yen AUDJPY=R , having shed more than a full yen since touching its highest since November on Friday.

Versus its Canadian counterpart, the Aussie stood at C$1.0043 AUDCAD=R , near a 10-month peak of C$1.0104.

NZ RATE OUTLOOK

Across the Tasman sea, the New Zealand dollar NZD=D4 eased to $0.8455, from a five-month peak of $0.8523 touched Friday. It also pulled back from a six-year high of 87.94 yen NZDJPY=R .

The kiwi found some support from upbeat fourth-quarter domestic manufacturing sales data, which added to recent signs of economic strength. News Search ID:nW9N0J6026

Investors are keenly awaiting a widely anticipated interest rate hike on Thursday. Markets have fully priced in the possibility that the Reserve bank of New Zealand will raise rates by 25 basis points to 2.75 percent, way ahead of most developed nations.

Ahead of Thursday's announcement, traders expect the kiwi will drift between $0.8350 and $0.8550. Many see the risk of a test this week of $0.8544, a high hit in October.

"The market wants to keep its powder dry for Thursday, but there's more buyers on dips than sellers on rallies at the moment," said Tim Kelleher, head of institutional FX sales at ASB in Auckland.

Market participants see the possibility that the RBNZ may raise its rate outlook to accommodate an outperforming economy, which would further raise the kiwi's rate advantage against many major currencies.

This could push the kiwi to a post-float high against a currency basket, after it matched it peak of 79.39 =NZD on Friday. On Monday, it traded at 79.20.

Some analysts see the tightening cycle peaking higher than around 4.5 percent suggested in the past by the central bank.

"We now see a 5.0 percent peak at the end of next year, as the RBNZ is forced to move above 'neutral' in order to contain inflation," BNZ analysts said in a note.

New Zealand government bonds 0#NZTSY= were slightly softer on Monday, with yields on most maturities inching up 1 basis point.

Australian government bond futures fell with the three-year bond contract YTTc1 down 4 ticks at 96.960. The 10-year contract lost 5.5 ticks to 95.835.

(Editing by Chris Gallagher)

((Cecile.Lefort@thomsonreuters.com)(+61 2 9373-1234)(Reuters Messaging: cecile.lefort.thomsonreuters@reuters.net))

Keywords: MARKETS AUSTRALIA/FOREX