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FOREX-Safe-haven yen, Swiss franc stand tall as trade tensions mount

Shinichi Saoshiro

* GRAPHIC: World FX rates in 2019

* Dollar stuck near 3-mth low vs yen, 1-mth low vs Swiss franc

* Focus on whether U.S.-China can reach deal in trade talks

TOKYO, May 10 (Reuters) - The safe-haven Japanese yen and Swiss franc stood tall on Friday amid investor concerns that a long-standing rift over trade between the United States and China could deepen if talks between the two fail to reach a last-minute deal.

U.S. and Chinese officials began two-day talks on Thursday in a bid to avert the escalation of a trade war that threatens to derail the global economy.

But acrimony between Washington and Beijing has risen this week and unless an agreement is reached, the United States is poised to trigger another round of punitive tariffs at 12:01 a.m. EDT (0401 GMT) on Friday.

The dollar traded at 109.860 yen after slipping to a three-month low of 109.470 overnight on the back of the trade concerns, which have sparked broad risk-aversion in global markets this week.

"The dollar is clearly on a downtrend against the yen, both in terms of technicals and flows," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

"That said, the market has been bracing for the United States triggering tariffs for a while now. There is also a fair amount of underlying dollar demand from Japanese institutional investors. Considering such factors, the dollar may not have much further room to fall."

The greenback stood at 1.0152 Swiss francs after dropping roughly 0.5 percent the previous day, when it touched a one-month low of 1.0122 francs.

The yen and franc tend to attract demand in times of market turmoil and political tension.

The euro nudged up 0.1 percent to $1.1225 after touching a one-week peak of $1.1251 the day before.

The dollar index against a basket of six major currencies, of which the euro is a main component of, was little changed at 97.429.

The index had slid to 97.238 on Thursday, its lowest since May 1, as a decline in U.S. Treasury yields as investors shied away from risk weighed on the dollar this week.

The Australian dollar, sensitive to shifts in risk sentiment, inched up 0.15 percent to $0.6997. The Aussie was still down 0.4 percent on the week, during which it brushed a four-month low of $0.6960. (Reporting by Shinich Saoshiro; Editing by Joseph Radford)