Wires

FOREX-Dollar rises as ebbing economic concerns boost bond yields

Shinichi Saoshiro
WATCH LIVE

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Dollar/yen brushes 2-week high as U.S. yields jump on data

* Aussie a shade lower, awaits RBA decision for near-term clues

TOKYO, April 2 (Reuters) - The dollar hit a two-week high against the yen on Tuesday, as ebbing concerns about the global economy pushed U.S. bond yields up from 15-month troughs.

The greenback was steady at 111.37 yen after touching 111.46, its highest since March 20.

U.S. Treasuries were sold and their yields had surged overnight, with the benchmark 10-year rate rising more than 8 basis points, as encouraging manufacturing data out of the United States and China spurred some investors to scale back their holdings of safe-haven bonds.

The 10-year Treasury yield stood at 2.492 percent , pulling back from a 15-month low of 2.34 percent brushed last week when risk aversion driven by concerns towards a global economic slowdown gripped the financial markets.

"The dollar is benefiting from broader 'risk on,' with bonds sold and stocks being bought in light of the strong U.S. ISM data," said Shin Kadota, senior strategist at Barclays in Tokyo.

The Institute for Supply Management (ISM) said on Monday that its index of national factory activity rose to 55.3 in March from 54.2 in February, which had marked the lowest level since November 2016.

The firm factory activity reading was enough to overshadow an unexpected drop in February U.S. retail sales.

"Seasonal flows also appear to be helping the dollar, with the currency drawing demand from participants kicking off the new quarter," Kadota at Barclays said.

The euro was down 0.1 percent at $1.1205. The single currency brushed $1.1198, its lowest since March 8, and was headed for its sixth straight day of losses.

The pound continued to move back and forth on Brexit-related developments.

Sterling last traded at $1.3059, down 0.35 percent, after the British parliament on Monday failed to agree on any alternative to Prime Minister Theresa May's divorce deal from the European Union.

The pound had rallied on Monday on expectations that an agreement would eventually emerge, leading to some sort of a trade agreement between the European Union and Britain.

The Australian dollar, sensitive to shifts in risk sentiment, was a touch lower at $0.7108 after edging up 0.2 percent the previous day.

Immediate focus was on the Reserve Bank of Australia's monetary policy decision due at 0330 GMT.

The central bank is expected to stand pat on interest rates, but its policy views will be closely watched after the Reserve Bank of New Zealand shocked the markets last week by adopting a dovish policy stance. (Reporting by Shinichi Saoshiro; Editing by Sam Holmes)