* Sterling falls to 6-week low of 83.80 pence
* UK clearer reported to be a large sterling seller vs euro
* Weak UK data expected to keep sterling pressured (Releads, adds quote, detail)
By Neal Armstrong
LONDON, Sept 6 (Reuters) - Sterling fell to a 6-week low versus the euro on Monday, hit by reports of heavy selling by a UK clearing bank and concerns over Britain's fragile economic recovery.
"The talk is of a large UK clearer having an axe to grind on EUR/GBP and it's about a billion euros," said a trader at a European bank in London.
Traders said there was speculation the order was related to the UK's contribution to the European Union's agricultural budget.
At 0925 GMT, the euro was trading with gains of around 0.3 percent versus sterling at 83.70 pence after rallying to 83.80, its highest level since July 29, bringing it within touching distance of resistance at 83.84, its 100-day moving average.
"Sterling is feeling the heat from weaker UK data last week and that keeps a UK slowdown in focus. It's been lagging the euro," said Paul Robson, currency strategist at RBS.
The euro/sterling buy order took its toll across the board, as the pound reversed earlier gains to trade down 0.3 percent against the dollar at $1.5400.
Sterling had initially rallied to $1.5490 as riskier assets were boosted in the wake of a U.S. employment report on Friday that was less dire than expected.
Technical analysts said next key support was at $1.5322, the 38.2 percent retracement of the May to August rally.
SOFT UK DATA
A string of soft data releases last week reignited concerns over the fragility of Britain's economic recovery, prompting expectations of pressure on sterling against most of its major crosses.
"Taking a look at sterling versus the Aussie dollar, the rand, the Swedish and Norwegian crowns, there is little to suggest other than a sell sterling rally mentality. I think it's on borrowed time at these levels." said a London-based spot trader.
Data on Friday showed British service sector activity grew at its slowest pace since April 2009, with a marked fall in hiring as employers worried about an economic slowdown and public spending cuts.
"Softer activity data, including last week's weaker-than-expected PMIs, have again raised fears of a double-dip recession and strengthened the case for additional policy support." said Barclays analysts in a note to clients.
This week's data calendar is light until Wednesday, when UK industrial production data for July is due, expected to show an increase of 0.3 percent in July.
(Editing by Patrick Graham)