Sterling adds to gains, hits 9-mth high vs weak dollar

Sterling hits 9-mth high vs broadly weak dollar pound edges closer * 2009 high vs basket of hard currencies of the United Kingdom * PMI, utilities, banks continue to support the pound

LONDON, Aug 4 (Reuters) - Sterling hit a nine-month high against a broadly weak dollar on Tuesday, extending its rebound in the aftermath of the strong production data from the UK and optimism about the health of domestic banks .

The British currency jumped as high as $ 1.7005 in Asian trade, boosted after a regional meeting in share prices at a 11-month high, fueled by demand risk to the detriment of the safe haven dollar .

"The generally weak dollar is driving the change of sterling today," said Jane Foley, director of research at Forex.com in London, said the dollar hovered near its lowest level of the year against a basket of currencies.

"If we see a significant move higher in sterling in the short term will have to come from a minor pullback in the dollar."

Sterling was flat against the dollar at $ 1.6930 at 0807 GMT, walking away from $ 1.7005, its highest level since mid-October. A 0.5 percent fall in UK shares. Ibex in the first helped trim some of the initial gains of the pound.

The UK currency rose more than 1.3 percent against the dollar on Monday, when an index of purchasing managers in the UK showed a growth in the manufacturing sector.

In addition, a rise in banking shares after the earnings results of HSBC and Barclays PLC, the previous day also provides an upward thrust to the pound, which is often closely correlated with movements in bank stocks, given significant impact from the banking sector in the rest of the UK economy.

The pound was supported against the euro EURGBP = R, which fell 0.2 percent to 84.97 pence and stayed near a one-month low around 84.59 pence hit on Monday. Against a basket of currencies, the pound sterling = GBP was in 84.6, a shadow of 2009 high of 84.7 reached in June.

Markets are awaiting the results of the Bank of England monetary policy meeting on Thursday. With interest rates expected to remain constant, the focus is on the future of quantitative easing. [BOE / INT]

If the Fed will pause or expand 125 billion pounds of asset purchase program still seems to be a close call. However, some analysts expect a positive outcome in pounds sterling, at least in the short term.