* Euro surges, lack of surprise in Basel III, China data help
* Aussie at 4-mo high, kiwi 1-mo peak as China data supports
By Charlotte Cooper
TOKYO, Sept 13 (Reuters) - The euro surged on Monday as positive market sentiment following upbeat Chinese data and a lack of surprises from new banking rules tripped automatic buy orders and sent it nearly 1 percent up on the dollar.
The upbeat economic numbers out of China also propelled the Australian dollar to its highest in four months against the greenback, as share markets around the region rose on positive risk sentiment, and the low-yielding yen retreated.
Automatic buy orders triggered around $1.2750 helped extend the euro's rally until it faltered just short of $1.2800, with talk of buying by a commodity trading adviser (CTA) also said to have helped the rise.
"It will be interesting to see if stock markets and long-term yields continue to rally on that positive sentiment," said Tohru Sasaki, chief foreign exchange strategist Japan, JP Morgan Chase.
The euro, which has suffered this year from concerns about sovereign debt and the European banking system, gained 0.8 percent to $1.2777 after touching $1.2796, its strongest level in about a week. It has support from its 100-day moving average at $1.2651.
It also gained 0.8 percent to 107.62 yen.
New Basel rules agreed on Sunday will require banks to hold top-quality capital totalling 7 percent of their risk-bearing assets, which is up from 2 percent under current rules but gives banks longer than expected to comply - a factor supporting markets.
Data at the weekend showed Chinese factories ramped up production in August and money growth topped expectations, indicating the economy remained buoyant despite government efforts to clamp down on bank lending and property speculation.
Furthermore, while inflation rose to its fastest pace in 22 months, the rate of 3.5 percent was in line with expectations and analysts said they did not see strong underlying pressures or a case for raising interest rates.
That helped the Australian dollar rise as far as $0.9320, its highest since late April, before coming back to stand 0.5 percent up on the day at $0.9310.
It now faces resistance from April highs of $0.9325 and $0.9389 and then its 2009 peak at $0.9407.
"If the Aussie breaks above its high since Lehman's collapse of around $0.94, that could send a strong bullish signal on the currency," a Japanese bank trader said.
It also gained against the yen, edging up 0.1 percent to 78.37 yen, above its 100-day moving average at 78.00 yen and its strongest level in a month.
The dollar edged further off its recent 15-year low against the yen following a rise in U.S. Treasury yields.
It was trading up 0.1 percent at 84.21 yen.
Japan's ruling party holds a leadership election on Tuesday in which Prime Minister Naoto Kan is being challenged by powerbroker Ichiro Ozawa.
For a poll on how markets are expected to react to the election outcome:
"The yen could have been bought too on Basel but political risk is preventing players from going long on the yen," said a trader at a European bank.
For a PDF on Japan and the yen click on
http://r.reuters.com/mam52p (Additional reporting by FX analyst Rick Lloyd in Singapore and Hideyuki Sano in Tokyo; Editing by Nathan Layne)