Sterling extends gains on strong UK services data

* Sterling hits 1-week high vs euro

* Pound up 0.6 pct vs dollar at $1.6528 GBP=D4

* UK services sector PMI hits highest since Aug 2007

* Risk aversion eases as equity markets rebound

LONDON, Nov 4 (Reuters) - Sterling rose on Wednesday after data showed a higher-than-expected increase in UK service sector activity and as a rebound in equity markets eased risk aversion.

Britain's service sector showed its strongest activity since the start of the credit crunch, helped by growth in new orders to a two-year high, a purchasing managers survey said.

The headline index for the services sector rose to 56.9 from 55.3 in October, its highest since August 2007 and the sixth successive month above the 50-level that separates growth from contraction. [ID:nLAG005896]

"It's a storming set of numbers. If you take the services survey with the pick-up in manufacturing earlier in the week, it does cement the view that we will get a recovery in the fourth quarter," said Brian Hilliard, economist at Societe Generale.