FOREX-Risk revival hurts dollar, European rate cuts awaited

* Aussie, euro recover as risk revival hurts U.S. dollar

* Rate cuts loom in euro zone, Britain, Australia

SINGAPORE, Nov 3 - The U.S. dollar retreated on Monday, after recording its biggest monthly gain in more than 17 years in October, on signs of some revival in risk appetite as investors anticipate another round of interest rate cuts by major central banks.

Asian stock markets were higher, the Aussie dollar rallied nearly 3 percent from Friday's lows and the Japanese yen surrendered some of its gains even though traders had their doubts about how long the revival would last.

"It feels like risk apetite is returning slowly to the market, so some of the yielders are better bid and in general U.S. dollar is offered," said Gerrard Katz, head of north Asian FX trading at Standard Chartered Bank.

Trading was thinned by a Japanese holiday on Monday. Equally, traders were unwilling to trust the rally in the euro and in risky assets ahead of various events this week, including the U.S. presidential election on Tuesday [ID:nN02470309].

The European Central Bank, the Bank of England and the Reserve Bank of Australia are all expected to lower rates to support their struggling economies from the threat of a looming global recession.

They are all seen easing by at least 50 basis points. Last week, the U.S. Federal Reserve cut its key rate by 50 basis points to 1 percent and the Bank of Japan (BoJ) cut its rate to 0.30 percent from 0.50 percent.

Emerging giants China and India also cut rates last week.

The Aussie was at $0.6807, while the yen was at 99.26 per dollar, compared with 98.66 late in New York on Friday.

"We could see more volatility this week with the U.S. election and ECB now fully expected to cut 50 basis points," Katz said, but he added that the euro would find support around last week's lows.

Last week, the euro fell to its weakest level in 2-½ years against the dollar.

Still, after last week's plunge in U.S. consumer confidence and data showing a sharp fall in U.S. home prices in August, the risk of a rapid deterioration in the world's other economies threatened to scupper any pick up in risk appetite.

"The focus this week is clearly on some of the major central banks and it is hard not to see the disease that started in the United States spreading to other economies," said Robert Rennie, chief currency strategist at Westpac, in Sydney.

Rennie added that investors were also likely to get a reminder of the weakness in the U.S. economy from key jobs data on Friday.

A Reuters poll shows the U.S. economy is likely to have shed 200,000 jobs in October with the unemployment rate rising to 6.3 percent as tight credit conditions force companies to cut costs.

A manufacturing survey due on Monday is also expected to show sluggish activity extending into October, backing views that the world's largest economy has slipped into a recession.

On Friday, data showed a steep drop in business activity in the U.S. Midwest, while a Commerce Department report showed consumers cut monthly spending for the first time in two years in September.

Elsewhere, the New Zealand dollar gained slightly as stocks there rallied, but with seemingly little reaction to data showing a record rise in labour costs in the third quarter and a fall in jobs.

The report did little to alter expectations of further interest rate cuts in New Zealand to follow last month's 1 percentage point cut to 6.5 percent. [nWEL378505] (Additional reporting by Anirban Nag in Sydney; Editing by Neil Fullick) ( Currency bid prices at 0458GMT. All data taken from Reuters with percent change calculated from the daily U.S. close at 2130GMT.

Last US Close %Chg YTD % 2007 Cls

. ------------------------------------------------------------- Euro/dlr 1.2838 1.2751 +0.68 -12.00 1.4589 Dlr/yen 99.16 98.66 +0.51 -10.93 111.33 Euro/yen 127.30 125.85 +1.15 -21.68 162.53 Dlr/swiss 1.1511 1.1597 -0.74 +1.55 1.1335 Stg/dlr 1.6232 1.6093 +0.86 -18.21 1.9847 Dlr/can 1.1966 1.2125 -1.31 +20.09 0.9964 Aus/dlr 0.6809 0.6634 +2.64 -22.25 0.8757 Euro/swiss 1.4781 1.4778 +0.02 -10.63 1.6539 Euro/stg 0.7910 0.7920 -0.13 +7.63 0.7349 Nzd/dlr 0.5927 0.5825 +1.75 -22.68 0.7666 Dlr/Norw 6.6292 6.7242 -1.41 +21.98 5.4347 Euro/Norw 8.5130 8.5822 -0.81 +7.37 7.9283 Dlr/Swed 7.6617 7.7396 -1.01 +18.56 6.4622 Euro/Swed 9.8418 9.8710 -0.30 +4.36 9.4304