Sterling hits 8-mth high vs dlr, UK house prices rise

* Sterling hits 8-mth high vs dollar on strong UK house data * TWI sterling climbs to highest of 2009 * Nationwide data shows UK house prices rose in June

LONDON, June 30 (Reuters) - Sterling rallied on Tuesday, hitting an eight-month high against the dollar after a surprising rise in monthly UK house prices.

Against a basket of currencies, the pound rose to its highest since November after the Nationwide building society said house prices rose 0.9 percent in June, confounding forecasts for a fall, to take the annual rate of decline to 9.3 percent, the smallest fall since July 2008 [ID:nLAG003551].

Analysts were surprised by the figures and cautioned that the monthly rise in prices may be a reflection of an ongoing shortage of supply, but added that the second month of price gains was positive for the UK economy and therefore sterling.

"It is an encouraging piece of news not only in what it reflects that there might be some housing market activity but because (weak house prices) have been one of the key stresses on the banking system," said David Page, economist at Investec in London.

"The removal of that constraint, as well as being good in its own right for the housing market, is positive for the banking system and cable, as the two are heavily linked."

The market is also awaiting a final estimate of first quarter UK GDP at 0830 GMT. The economy is expected to have contracted 2.1 percent on the quarter, and 4.3 percent on the year.

Sterling GBP=D4 climbed as high as $1.6745, its strongest since mid-October 2008, after the data was released in early London trade. By 0753 GMT, it had trimmed some of those gains to trade at $1.6675, up 0.8 percent on the day.