* Aussie and kiwi both firmer in reaction to China data
* Sterling shines on expectations of early BoE tightening
* Euro supported after positive inflation and jobs data
LONDON, Dec 2 (Reuters) - The Australian and New Zealand dollars rose sharply on Monday following positive data from China while sterling hit a five-year high against a basket of currencies, driven ny better economic prospects.
Investors bought the Australian and New Zealand dollars after a survey on Sunday showed China's factory growth held at an 18-month high in November, an outcome that was slightly ahead of expectations. Both Australia and New Zealand are highly leveraged to China's economic cycle.
Sentiment was buoyed further after a similar Chinese private manufacturing survey published on Monday was revised up from preliminary reading.
The Aussie rose 0.5 percent to $0.9150 and the kiwi advanced 0.9 percent to $0.8195.
"The Aussie has been helped by the Chinese data and we think there is still some scope for it to gain, given that we expect the dollar to stay slightly softer," said Paul Robson, currency strategist at RBS.
The dollar index was down 0.1 percent at 80.589, with the U.S. currency weakening against most major currencies bar the yen and to a certain extent the Canadian dollar.
The dollar's weakness saw sterling jump to a two-year high of $1.6443. Traders said hedge funds bought the pound on the back of solid UK economic data that has surprised the markets.
The pound also hit a 10-1/2-month high against the euro at 82.75 pence and a five-year high of 168.55 yen. All that saw sterling hit a five-year high against a trade-weighted basket of currencies of 84.9.
By contrast, the yen continued to struggle after falling more than 4 percent in November against the dollar and euro. Investors have been selling the low-yielding yen to buy riskier assets in carry trades made attractive by the Bank of Japan's ultra-loose monetary policy.
BOJ Governor Haruhiko Kuroda said on Monday that he would not hesitate to adjust policy, fanning speculation the bank could take more easing steps next year.
The greenback last stood at a six-month high of 102.68 yen , while the euro was at 139.52 yen, near a five-year high of 139.705 hit on Friday.
The euro was supported after Friday's euro zone inflation and employment data dented speculation over further monetary easing by the European Central Bank.
Against the dollar, the euro was little changed at $1.3595 , not far from Friday's one-month high of $1.3622.