* Risk appetite boosted by stock rally, upbeat data
* Aussie, kiwi, sterling hit multi-month highs vs dlr
* RBA likely to keep rates at 3 pct, may drop easing bias
By Kaori Kaneko
TOKYO, Aug 4 (Reuters) - The dollar stayed near its lowest level this year against a basket of currencies on Tuesday, as bullish global stock markets and upbeat economic data lifted investor risk appetite, denting the greenback's appeal.
The Australian dollar hit a 10-month high against the dollar and the yen ahead of the Reserve Bank of Australia's interest rate decision later on Tuesday, when some market participants suspect it may abandon its easing stance.
The New Zealand dollar and sterling also hit multi-month highs against the dollar, with the euro holding firm, after positive manufacturing reports from the U.S., Europe and China on Monday boosted hopes for the global economy, dealers said.
Tokyo's Nikkei share average hit its highest in 10 months on Tuesday after U.S. stocks rallied the previous day, pushing the benchmark S&P 500 Index above 1,000 for the first time in nine months.
"Expectations for a global economic recovery were boosted further after the series of upbeat data," said Tomohiro Nishida, treasury department manager at Chuo Mitsui Trust and Banking.
"The market will likely keep its risk-taking stance but we may see some correction as we get closer to Friday's U.S. employment report," he said.
The dollar index, a gauge of the greenback's performance against six other major currencies, was down 0.1 percent to 77.554, from late U.S. trade on Monday. Earlier on Monday it fell as far as 77.451, its lowest since Sept. 29.
The euro was steady at $1.4417, not far from this year's high of $1.4445 hit on trading platform EBS on Monday.
Against the yen, the euro rose 0.1 percent to 137.41 yen after earlier rising as high as 137.70 yen on EBS, its highest since mid-June.
The dollar fared better against the yen, up 0.1 percent at 95.39 yen.
Sterling rose 0.2 percent to $1.6973 after rising to $1.7005 on the Reuters dealing system, its highest in more than nine months.
Data showed on Monday that the U.S. manufacturing sector continued to shrink in July but at a slower pace than in June. The Institute for Supply Management said its index of national factory activity rose to 48.9 in July from 44.8 in June, beating economists' expectations. A reading below 50 indicates contraction.
The euro zone's factory sector edged closer to recovery in July and a key gauge of China's manufacturing sector hit a one-year high, data showed on Monday.
RBA IN FOCUS
The Reserve Bank of Australia will announce its interest rate decision later on Tuesday. The central bank is seen as almost certain to keep interest rates steady at 3.0 percent for a fourth month and might take a step towards eventual hikes by dropping any reference to room for easing.
Australian Treasurer Wayne Swan said on Tuesday that Australian interest rates would rise along with other global interest rates.
"When hopes that the global economy is stabilising dominate the market, as right now, the Aussie rises, benefiting from higher interest rates compared to other nations," said a trader at a Japanese bank.
"On the back of demand from China, the Australian economy is expected to recover quicker than other industrialised nations. The central bank will probably show its bullish view on its economy today," he said.
The Australian dollar rose 0.5 percent to $0.8466 after brushing a 10-month high above $0.8470 on the Reuters dealing system. Against the yen, the Aussie also hit a 10-month high above 80.80 yen.
The New Zealand dollar rose 0.2 percent to $0.6692 after rising above $0.6710, also its highest in 10 months. (Editing by Joseph Radford)