FOREX-Euro hits multi-month highs; U.S. ISM eyed

* Euro gains as Asian central banks shed dollars

* Euro hits 6-month high of $1.3763

* Dollar index hits 8-month low <.DXY>

* U.S. ISM watched for hints on more QE

(Releads, adds quotes, updates prices)

By Tamawa Desai

LONDON, Oct 1 (Reuters) - The euro rose broadly on Friday, hitting a six-month high against the dollar as Asian central banks were seen selling the U.S. currency for euros to rebalance their books and helped by technical triggers.

Market players said Asian central banks bought dollars versus local currencies in Asian hours, and subsequently were seen selling the greenback to rebalance their reserve portfolios by buying euros.

The euro extended gains after breaking above an option barrier at $1.3700 as speculative players bought into the pair, with talk of a digital option at $1.3750 set to expire at the New York cut at 1400 GMT pushing it to $1.3763, its highest since mid-March.

By 1136 GMT, the euro was up 0.7 percent at $1.3725. The euro is poised to close above its 55- and 100-week moving averages at $1.3612 and $1.3572 respectively and technical analysts said this would open the way to more gains.

The euro zone manufacturing purchasing managers' index (PMI) for September dropped to 53.7 from 55.1 in August, slightly above an earlier flash reading of 53.6. [ID:nSLAUKE6EC] Euro zone unemployment was also stubbornly high at 10.1 percent in September. [ID:nLDE6900PQ]

"PMI results across the euro zone were mixed, and pointed to a divergence in growth prospects," said Geoffrey Yu, currency strategist at UBS, adding the results were not surprising and market reaction was subdued.

The euro also touched a four-month high against sterling and hit a two-month peak against the yen at 114.50 yen .

Upbeat Chinese PMI data earlier helped boost demand for riskier assets and pushed the Australian dollar to match a two-year high versus the U.S. unit of $0.9734 .

U.S. DATA EYED

Losses against the euro helped push the dollar down 0.6 percent against a currency basket, driving the dollar index <.DXY> to 78.147, its lowest since January. The index fell more than 5 percent in September, its worst monthly performance since May 2009.

Market players will look to a key U.S. manufacturing index due at 1400 GMT to gauge whether more monetary easing is in store. The Institute for Supply Management (ISM) index is forecast in a Reuters poll to come in at 54.5.

"The market is nervous about the ISM because investors know that it could be worse than expectations," said Lutz Karpowitz, currency analyst at Commerzbank in Frankfurt.

"More QE could be in store if U.S. data in the coming weeks don't surprise on the upside."

On the other hand, a strong reading could slightly weaken the case for more asset-buying by the U.S. Federal Reserve.

"It will be key how Treasury yields react to the data releases, as higher yields could provide some respite for the dollar," said UBS's Yu.

The dollar slipped 0.3 percent against the yen to 83.21 yen , hovering near a 15-year low of 82.87 yen hit last month which prompted Japan to sell the yen, but investors remained wary of more intervention.

Japanese Finance Minister Yoshihiko Noda said on Friday he would continue to take decisive steps on currency moves when necessary. [ID:nTKX007018]

(Additional reporting by Naomi Tajitsu)