Aussie dlr rises as firm GDP fuels tightening talk

* Aussie bounces after stronger-than-expected GDP

* Markets fully priced for a 25-bps rate hike in Nov

* Bill, bond futures fall as tightening eyed

SYDNEY, Sept 2 - The Australian dollar climbed to the day's highs on Wednesday after data showed the local economy grew at its fastest pace in over a year, encouraging bets local interest rates could still rise by November.

The Aussie <AUD=D4> rose to as high as $0.8338 and bill futures <0#YBA:> fell as investors wagered the 0.6 percent growth in Australia's economy last quarter meant rates can't stay at a record low of 3 percent for long. [ID:SYD536295]

"This is a set of national accounts that will shift the Reserve Bank of Australia (RBA) from its neutral bias to a tightening bias," said Glenn Maguire, a Societe Generale economist in Hong Kong.

Maguire said he expects the RBA to hike rates by 25 basis points each time at its November and December policy meetings.

Expectations of imminent tightening pressured December bill futures <YBAc2> down 0.1 point to 96.03. Interbank futures <0#YIB:> show markets are fully priced for 3.25 percent by November, while the one-month implied rate in December is seen at 3.47 percent.

Three-year bond futures <YTTc1> fell 0.02 points to 95.06, and the ten-year contract <YTCc1> lost 0.035 points to 94.635.

The Aussie steadied around $0.8328 by early evening, testing the support level of a six-month trend channel, but still well below $0.8424 seen here late Tuesday.

Against the yen, the Aussie rose to 77.31 <AUDJPY=>, off a six-week low of 76.37 struck earlier in the day.

The RBA had surprised investors on Tuesday when it refrained from shifting to a tightening bias after its policy meeting, saying instead its present accommodative stance was appropriate.

Many investors had expected a tightening bias after the RBA's recent hawkish remarks that rates have to rise from the "emergency" level of 3 percent as the economy recovers.

Yet, even amid bets of higher local rates, Philip Burke, a JPMorgan trader, said the Aussie could weaken in coming days as a preference for profit-taking seemed to be gathering pace.

Burke said macro hedge funds and mutual funds were selling into Wednesday's bounce, which was partly aided by a squeeze on short positions.

"To me, the selling of U.S. equities overnight despite the good economic data was a pretty significant sentiment change," he said. U.S. stocks tumbled 2 percent on Tuesday despite strong U.S. manufacturing and home sales data.

Burke said Aussie could come under selling pressure if it breaches the next significant option levels of $0.8225-$0.8240. ----------------(Snapshot at 4:30 p.m./0630 GMT)---------------- FUTURES CASH YIELD 90-DAY BILL 90-DAY BILL<YBAc1> (SEP) 96.60 (-0.04) AU3MBB=RR 3.38 (3.44) 3-YR BOND <YTTc1> (SEP) 95.06 (-0.02) AU3YT=RR 4.86 (4.86) 10-YR BOND <YTCc1> (SEP) 94.635(-0.035) AU10YT=RR 5.46 (5.43) AUD/USD <AUD=> 0.8328 (0.8424) US10YT=RR 3.38 (3.41) ---------------------------------------------------------------- AUD VS 2-YR 10-YR *AUD 3-YR/10-YR SPREAD USD +356 (+347) +208 (+202) *FUTURES +0.425(+0.425) CAD +324 (+315) +211 (+206) *AUD 2-YR/10-YR SPREAD NZD +45 (+38) -20 (-27) *CASH +98 ----------------------------------------------------------------