* Dollar hits multi-month lows vs euro, sterling, high-yielders
* China PMI data adds to optimism on the global economy
* General Motors to file for bankruptcy
* Risk appetite, share gains push dlr index to year low
(Adds quotes, changes byline, dateline; previous TOKYO)
By Jessica Mortimer
LONDON, June 1 (Reuters) - The dollar tumbled broadly on Monday, hitting multi-month lows against commodity-related currencies, the euro and sterling as optimism about the global economy continued to boost currencies perceived to be riskier.
News that China's manufacturing sector continued to expand modestly, coupled with Friday's better-than-expected U.S. gross domestic product data, further encouraged investors to increase their exposure to risk, to the detriment of the U.S. dollar.
The dollar fell to its lowest since mid-December against a basket of currencies and against the euro, while sterling hit a seven-month high and the higher risk and commodity-related Australian and New Zealand dollars hit eight-month highs.
News that General Motors Corp would file for Chapter 11 bankruptcy protection later on Monday failed to dent risk appetite, with European shares up 1.9 percent as commodity prices rose, with oil at a near 7-month high.
"GM has been a headache for the markets for a while, and the fact that a deal is being reached is seen as a positive because it removes a lot of uncertainty," SEB currency strategist Johan Javeus said.
"There are bits and pieces of good news from many different areas and the risk-on theme is definitely still in place for the moment," he said, adding that risk appetite continues to be the main driver for dollar weakness.
Later today, focus will centre on the release of the latest U.S. ISM survey on manufacturing activity at 1400 GMT. Markets will also be eyeing the final estimate of the euro zone purchasing managers' index for manufacturing at 0758 GMT.
The dollar index hit a year-low of 78.729 as the euro rose to its highest so far this year at around $1.4226.
Sterling rose to its highest in seven months against the dollar of $1.6377, while the Australian and New Zealand dollars hit eight-month highs of $0.8098 and 0.6493 respectively.
Concern about the expanding amount of Treasury debt needed to fund a record U.S. budget deficit has also been putting pressure on the dollar just as signs that the economy may be through the worst have encouraged investors into riskier assets.
"The tone has not changed -- risk positive and dollar weakness," said Masafumi Yamamoto, head of FX strategy Japan at Royal Bank of Scotland in Tokyo.
"It seems that dollar-based hedge funds or U.S. investors are finally using the cash piled up during the risk aversion period."
Adding to optimism that the global economy may be over the worst of the recession, data showed China's manufacturing sector continued to expand moderately.
Though the official purchasing managers' index dipped to 53.1 in May from 53.5 in April, this was the third month in a row that the reading has been above the 50 level that separates expansion from contraction..
Meanwhile, investors will be watching closely for further news on General Motors after U.S. officials said the auto giant will file for bankruptcy later Monday, the third largest in U.S. history.
(Additional reporting by Charlotte Cooper in Tokyo)