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Aussie skids to 3-wk lows on China data, bonds jump

* Aussie and kiwi dip 0.3 pct vs USD

* Aussie 10-yr bond futures at 2-month highs

* Markets narrow odds of RBA rate cut on Tuesday

By Mantik Kusjanto and Cecile Lefort

SYDNEY/WELLINGTON, Oct 1 (Reuters) - The Australian dollar eased 0.3 percent to three-week lows against the U.S. dollar on Monday after China's manufacturing PMI disappointed a market already worried about global growth and Europe's debt issues.

The Aussie ended the day at $1.0338, having slipped in intra-day trade to $1.0326, its weakest since September 7, where it found some support.

If it fell below $1.0275, some techinal analysts said it could slide all the way to $1.0165, its lowest since July.

Overhead resistance lay at $1.0410.

Traders said investors used the reading of China's official factory purchasing managers' index of 49.8 as an excuse to book profits following recent gains. On Friday, the Aussie climbed to its highest in a week at $1.0474.

"Markets were searching for a theme. There was a lot of overhang from Friday and the mood today was generally heavy," said a trader at a European bank in Singapore.

China's PMI figure came exactly in line with expectations, but it also reflected how the world's second-biggest economy is struggling to regain strength against cooling exports.

The Antipodean currencies are highly sensitive to news out of China, a key export market.

Risk sentiment was already shaky earlier on Monday with markets worried about Spain and Europe slipping towards recession as well as the U.S. recovery losing steam.

Investors' focus is now on the Reserve Bank of Australia's (RBA) rate decision on Tuesday.

Interbank futures have narrowed the odds, factoring in a 72 percent chance of a 25 basis point-cut to 3.25 percent. But economists are not so convinced with 13 of 19 economists surveyed by Reuters forecasting the RBA to keep rates on hold.

They believe the bank will wait for confirmation of tame inflation later in the month before cutting.

A decision to hold rates could underpin the Aussie.

Data out on Monday showed a private gauge of Australian inflation edged up only modestly in September, suggesting price pressures were not great enough by themselves to prevent a cut in interest rates.

AUSSIE BOND FUTURES RALLY

Australian government bond futures rose, with the longer-end gaining the most. The 10-year contract jumped to a two-month peak of 97.135. The three-year contract added 0.03 points to 97.680, not far from its highest since early September.

The New Zealand dollar slipped 0.3 percent to $0.8270, after hitting a six-month high of $0.8357 on Friday.

Having gained a whopping 11 percent over the past four months, the kiwi may struggle to break higher.

"Shorter term risks are negative - overpositioning and overvaluation," said Westpac senior strategist Imre Speizer.

He pointed to a large build-up in long kiwi positions to an extreme level, warning of a reversal soon.

Technically, near term kiwi support was seen at $0.8254 and below that $0.8230, with the topside likely capped at $0.8330.

A Westpac survey showed sentiment among NZ workers perked up from a three-year low in Q3, but it was still pessimistic even as the economy was expected to pick up more due to rebuild after the earthquake in Christchurch.

New Zealand government bonds were mostly flat with trading activity thinned as much of Asian and Australian markets were shut for public holidays.

(Editing by Simon Cameron-Moore)

((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 802 7980))

Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX