* Sterling within half a U.S. cent of 31-year low
* PM May says EU divorce process to begin by March
* Deadline seen removing any doubts Brexit will happen
* UK manufacturing PMI easily beats forecasts
By Jemima Kelly
LONDON, Oct 3 Sterling slid to a three-year low
against the euro and to within half a cent of a 31-year trough
versus the dollar on Monday, after a March deadline was set for
the start of the formal process that will split Britain from the
British Prime Minister Theresa May told her Conservative
party's annual conference on Sunday that she was determined to
move on with the process and win the "right deal", in an effort
to ease fears inside her party that she may delay the divorce
Sterling, having just posted its worst run of quarterly
losses since 1984, skidded more than 1 percent against the
dollar to as low as $1.2845. That left it less than
half a cent away from the 31-year low it reached in early July,
shortly after the June 23 vote to leave the EU.
The pound also shed 1 percent against the euro to hit 87.48
pence, its weakest since August 2013.
While May dismissed the idea that Britain faced a choice
between a "soft" or "hard" Brexit, some investment banks and
analysts said her comments indicated the latter, meaning Britain
could abandon the EU's customs union and give up on seeking
preferential access to the single market.
"The market seems to have been caught a little off guard by
this speech from Theresa May over the weekend, which signalled
that perhaps the starting point for negotiations is going to
focus a touch less on the pursuit of single-market access than
some had expected," said BNP Paribas currency strategist Sam
Lynton-Brown, in London.
"There's been very little information given so far on the
angle the government is going to take when it invokes Article
50, so for the time being the pound should remain very sensitive
to any information we get, because it's coming against the
backdrop of a lot of uncertainty."
Data showing British factory activity grew at the fastest
rate in more than two years last month, boosted by a surge in
export orders brought on by the slump in sterling, failed to
push sterling back above $1.29.
Neither was the pound much stirred by comments from British
Finance Minister Philip Hammond, who told the BBC on Monday that
the country needed a new fiscal plan to navigate the economic
turbulence caused by Brexit.
By 1050 GMT the currency was trading down 0.8 percent on the
day at $1.2880 and at 87.25 pence per euro.
LINGERING DOUBTS REMOVED
Triggering Article 50 of the EU's Lisbon Treaty will
redefine the country's ties with its biggest trading partner.
"The fact that May has confirmed the timings for the
triggering of Article 50 took away any lingering doubts and any
lingering supportive elements for the currency, whereby ... we
could pretend nothing was going on," said UBS Wealth Management
currency strategist Geoffrey Yu.
Elsewhere, the Norwegian crown hit a 14-month high of 8.9300
crowns per euro, as oil prices rose above $50 a
barrel. The country's central bank earlier this month left
interest rates unchanged and said they could remain at that
level for several years, which had helped lift the currency.
The euro steadied at $1.1237 after news that Deutsche
Bank was attempting to negotiate a much smaller fine than the
$14 billion the U.S. Department of Justice initially demanded,
though no formal settlement has been announced yet.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Tokyo markets team; Editing by Larry