Sterling tops $1.71, highest since October 2008

* Sterling hits new almost-six-year-high of $1.7114

* Investors cut dollar exposure before slew of U.S. data

* Pound gains against euro after flat inflation numbers

By Jemima Kelly

LONDON, June 30 (Reuters) - Sterling hit its highest level against the dollar in almost six years on Monday, helped by expectations that the Bank of England will tighten policy in the coming months, while uncertainty about U.S. growth drove investors away from the dollar.

The pound topped $1.71 and was on track for its fourth successive quarter of gains against the dollar. The greenback, meanwhile, slid to a six-week low against a basket of currencies as traders grew cautious ahead of a slew of U.S. economic data this week following disappointing growth numbers last Wednesday.

But not everybody in the market expected more bad news from the United States this week. "What's missing at the moment is dollar strength," said Sara Yates, global head of currency strategy at JP Morgan Private Bank.

"The weakness we've seen in U.S. data has all been about the snow," she said, referring to the unusually cold winter and spring in much of North America. "We think the market has overreacted to the Q1 GDP number we got last week from the U.S."

For the time being, though, the dollar is under pressure, ceding ground against almost every major currency on Monday afternoon following data showing the pace of business activity in the U.S. Midwest fell more than expected in June.

Sterling gained nearly half a percent on the dollar, hitting a $1.7114, its highest since October 2008 when the global financial crisis was gripping Britain.

The euro was also down against sterling, with the single currency slipping 0.1 percent to 80.04 pence.

Data from the euro zone showed inflation flat at 0.5 percent in June, easing immediate pressure on the European Central Bank to act again soon to tackle slow price rises, though inflation is still languishing in what ECB President Mario Draghi has called a "danger zone" of below 1 percent.

British gilts fell on Monday, underperforming their German counterparts ahead of supply the next day.

Britain is poised to sell 4 billion pounds of bonds maturing in 2019, only a week after the launch of a new 30-year gilt, via syndication, drew record demand from an overwhelmingly domestic investor base.

"Given that we just had the syndication last week and we have another auction tomorrow, maybe the relatively heavy dose of supply we are in the midst of in the UK is one reason why we are underperforming," said Sam Hill, senior economist at RBC (MCX: RBCM.ME - news) .

Five-year British yields were 2.5 basis points higher at 2.04 percent and the ten-year yield was up 3.1 bps at 2.67 percent.

The premium 10-year gilts offer over their German counterparts was around 141 bps, up from 138 bps on Friday. It reached its highest level since 1997 on June 20 at 144 bps on increasingly diverging monetary policies. The Bank of England is expected to be the first among major central banks to raise interest rates, this year or early next.

Graham Davidson, a spot trader at Australian bank NAB in London, said he favoured buying the pound against the Australian dollar in the light of contrasting monetary policy messages in the two countries.

"I like sterling against the Aussie. The RBA (Reserve Bank of Australia) tonight I think will play things pretty dovish, pretty downbeat on the economy, while the Old Lady (BoE) is talking about hiking rates pretty much continuously, however you view the likely timing of rate hikes." (Additional reporting by Ana Nicolaci da Costa and Patrick Graham, editing by Mark Heinrich)