FOREX-Dollar down broadly as risk appetite rises

* Euro rises 1 pct vs dlr, sustained by bank rules pact

* Strong Chinese data boosts risk appetite, Aussie gains

* No yen intervention, focus shifts to Japan party race (Adds details, updates prices, changes byline, dateline, previous LONDON)

By Steven C. Johnson

NEW YORK, Sept 13 (Reuters) - The dollar shed 1 percent against the euro on Monday and slipped against other major currencies as strong Chinese economic data and new global banking rules encouraged investors to take on more risk.

Thanks to recent better-than-expected U.S. employment data, investors began the week in an already upbeat mood about the global outlook. New data showing Chinese factories ramped up production last month and money growth beat expectations backed the view that markets had grown too gloomy in their outlook.

For more on China, see [ID:nTOE68A00H]

Investors were also cheered when regulators agreed on tough new capital requirements for banks on Sunday, with lenders given more time than expected to comply with them. [ID:nLDE68B0BP]

That helped drive the euro above $1.28 -- it fell below $1.26 in late August -- and lifted the high-yielding Australian dollar to a five-month peak around $0.9333 . Australia is a top supplier of raw materials for China.

"There's no doubt that risk appetite has returned, and the strong Chinese data reduces the risk of a global double-dip recession," said Matthew Strauss, senior strategist at RBC Capital Markets in Toronto.

The euro was up 1.1 percent at $1.2820 . Earlier gains triggered automatic buy orders around $1.2750, and its break of its 55-day moving average at $1.2815 drove it as high as $1.2833, according to Reuters data. The euro also rose 1.1 percent to 107.85 yen .

The euro also got a boost after the European Commission said it expects the euro zone economy to grow almost twice as fast in 2010 as previously thought [ID:nLDE68C0KA].

Analysts said the euro was targeting $1.2920, a level it failed to break above earlier this month, but warned it would remain within its recent range unless it topped that level.

YEN SLIPS, CHINA IN FOCUS

The dollar was flat at 84.14 yen but was still near a 15-year low around 83.34 yen. That kept investors on alert to see whether Japanese authorities would intervene to weaken the yen ahead of a ruling party leadership vote Tuesday.

Polls are pointing to a cliff-hanger. If challenger Ichiro Ozawa ousts Prime Minister Naoto Kan, analysts expect the dollar to rise against the yen, as Ozawa has advocated strong intervention to curb the yen's strength.

"The price action suggests investors are using any opportunity of yen weakness to buy back the currency," said Simon Derrick, head of currency research at BNY Mellon.

Traders said bids from Japanese importers around 83.50-80 yen were countered by exporter offers reported above 84.20 yen. Option-related demand also lifted the dollar off session lows.

Were Japan to intervene, it is expected to act alone, as European leaders have signaled opposition to any efforts to weaken the currency, while U.S. authorities are more focused on persuading China to allow more yuan appreciation.

Treasury Secretary Timothy Geithner was expected to discuss China's exchange rate practices at Congressional hearings this week.

In remarks published in the Wall Street Journal on Monday, he said China has made "very, very little" progress on letting the exchange rate reflect market forces. [ID:nTOE68B01F]

China loosened the yuan's peg against the dollar in June, but the dollar has only fallen about 1 percent since then.

(Additional reporting by Jessica Mortimer in London; Editing by Chizu Nomiyama)