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CORRECTED-Sterling slips as Brexit talks resume

(Removes references to positioning data in headline, para 1, para 12 and chart as data to Nov 10 has yet to be released.)

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

LONDON, Nov. 16 (Reuters) - Sterling slipped in early London trading on Monday as Brexit talks resumed in Brussels.

European shares hovered near nine-month highs as stronger-than-expected Chinese factory output, combined with hopes for a COVID-19 vaccine, increased investors’ risk appetite.

After initially opening higher, the pound fell as investors focused on Brexit negotiations, which have failed to make progress on two key issues: competition rules and fishing.

Britain left the EU in January and both sides are trying to reach a deal that would govern nearly 1 trillion dollars in annual trade before the status-quo transition period ends on Dec. 31.

Some analysts said the recent departure of Dominic Cummings, Prime Minister Boris Johnson’s top advisor and Brexit campaigner, was a positive development, which could lead to Britain being more willing to compromise.

ING strategists, in a note to clients, said that while prospects for a deal looked slightly brighter, the core issues remained largely unresolved and time to reach an agreement was running out.

“While we see officials suggesting more than one week may still be needed, the technical time for ratification in the EU and UK is dangerously shrinking,” they added. “In light of this, we could see both parts rushing into a deal already this week.”

At 0914 GMT sterling was flat against the dollar at $1.3198, having risen to as much as $1.3242 in early London trading .

Versus the euro it was down around 0.2% at 89.825 pence per euro.

Britain’s health secretary Matt Hancock said on Monday that the UK’s red lines in the negotiations had not changed, while Ireland’s foreign minister said that there would be trouble if a breakthrough was not made in the next week to ten days.

A survey showed that nearly half of small and medium-sized British manufacturers have no idea how the end of the transition period will affect their business.

Elsewhere, Prime Minister Boris Johnson said he was isolating after coming into contact with someone with COVID-19. He said in a video tweet that he was in good health. (Reporting by Elizabeth Howcroft; Editing by Kirsten Donovan)

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