* Funding currencies drop as global stocks push higher
* Australian and New Zealand dollars outperform on Chinareforms
* Easy money, low rates pledge buoy risk sentiment
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 18 (Reuters) - The safe-haven dollar and yenfell on Monday after China announced its most sweeping economicand social reforms in nearly three decades, boosting investorappetite for higher-yielding currencies such as the Australianand New Zealand dollars.
Chinese shares posted their biggest gain in morethan two months on Monday, while global shares hit their highestlevels since the start of 2008.
"Risk appetite is strong...after details of China's reformprove more dramatic than expected, suggesting a focus on marketliberalization and reforms in both the government role and thebroader corporate structure," said Camilla Sutton, chiefcurrency strategist, ScotiaBank in Toronto.
The dollar index, which gauges the greenback's value againsta basket of currencies,slipped 0.3 percent to 80.611,pushing the euro 0.3 percent higher to $1.3533.
The euro received some support after data showed the eurozone's trade surplus grew more than expected in September.
The Australian dollar rose as well, up 0.8 percent atUS$0.9409, while the New Zealand dollar gained 0.5percent to US$0.8377.
Both the Aussie and Kiwi tend to perform well when investorsare prepared to take on more risk or on better prospects forChinese growth.
The yen fell against most currencies as well, with theAustralian dollar rising 0.2 percent to 94.07 yen andthe New Zealand dollar advancing 0.2 percent to 83.74 yen. The Japanese currency is considered a safe assetbecause it is highly liquid.
The dollar came off highs last week as the Federal Reserve'schief-in-waiting, Janet Yellen, encouraged faith it would keepit $85-billion-a-month bond purchases intact this year. Mostinvestors now expect the Fed to start paring stimulus only inMarch 2014, meaning there will be more dollars flushing around.
The European Central Bank has also pledged to keep interestrates near record lows and may yet take more action while theBank of Japan is also set to be aggressive in providing monetarystimulus to reach its inflation goal. The BOJ will hold aregular policy meeting this week and is expected to maintain itsultra-loose policy.
Morgan Stanley's head of European currency strategy IanStannard also pointed to reform plans for Japanese pensionfunds, which could weaken the yen.
"The suggestions ... are that we could see somediversification out of JGBs (government bonds) and intohigher-risk assets, and allocations overseas, which should putpressure on the yen," he said.
Investors are keeping a close eye on coming U.S. data togauge the timing of any tapering of the Fed's bond-buying.
A key piece on data, due on Wednesday, is October retailsales. Data on Friday showed currency speculators added to morefavourable bets in the dollar and turned even more negative onthe yen in the week ended Nov. 12.
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