* Yen holds recent gains as investors seek safety
* Sterling slides on Johnson move to limit parliament's time
* Aussie falls again, heads back towards decade low
* Italian political boost unlikely to help euro much,
analysts say
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new quote, details, updates prices)
By Tommy Wilkes
LONDON, Aug 28 (Reuters) - The Japanese yen clung to its
recent gains on Wednesday as worries about a global economic
downturn grew, while sterling slumped on British Prime Minister
Boris Johnson's move to limit parliament's opportunity to derail
his Brexit plans.
Two-year U.S. government bond yields rose further above
10-year yields, a deepening of the so-called inversion of the
yield curve that many see as a harbinger of a recession.
Investors worry the trade conflict between the United States and
China could tip the world into an economic slowdown.
The yen stood at 105.78 yen per dollar JPY=EBS , unchanged
on the day but close to the 7-month high of 104.46 yen hit on
Monday.
"Much if not all of the decline in dollar/yen is simply down
to markets becoming more risk averse," said Adam Cole, currency
strategist at RBC Capital Markets.
Cole said, however, that if the outlook for the global trade
conflict improves and risk appetite recovers, he expected the
dollar to "grind higher" against the yen as Japanese investors
continue to buy higher-yielding dollar assets without hedging
the currency risk, which would support the greenback.
The dollar index, which measures the U.S. currency against a
basket of currencies, rose marginally to 98.091 .DXY .
Sterling skidded more than 1% against the euro and dollar on
media reports of Boris Johnson's plans. A government source said the prime minister, who has vowed
to take Britain out of the EU without a divorce deal if
necessary, would set an Oct. 14 date for the Queen's Speech -
the formal state opening of a new session of parliament.
That would effectively shut parliament from mid-September
for around a month and reduce the parliamentary time in which
lawmakers could try to block a no-deal Brexit.
Sterling was last down 0.7% at $1.2198 GBP=D3 and 0.7%
lower versus the euro at 90.93 pence EURGBP=D3 , just off the
day's lows.
Elsewhere, weaker risk appetite weighed on the Australian
AUD=D3 and New Zealand NZD=D3 dollars, which tend to perform
well when investors buy into riskier assets.
The Aussie has been on the back foot since Reserve Bank of
Australia (RBA) Deputy Governor Guy Debelle said on Tuesday that
a weakening the currency was supporting the economy and that
further falls would be beneficial. The Aussie had fallen to a more than decade-low of $0.6677
early in August. On Wednesday it stood at $0.6724, down 0.1% on
the day while the kiwi was 0.3% lower at $0.6341.
The Chinese yuan edged lower to 7.1703 CNH=EBS in offshore
markets, not far from the record low of 7.187 it touched on
Monday.
Euro/dollar was little changed, trading at $1.1091 EUR=EBS
with little in the way of new economic data scheduled for
Wednesday or developments to spark bigger moves.
Analysts at ING said positive news in Italy, where the
5-Star Movement and the opposition Democratic Party appear on
the verge of agreeing a governing coalition, would not help the
euro significantly.
"Instead the escalation in trade wars merely looks to extend
the slow-down in manufacturing, depressing European growth still
further. Like all activity currencies, the EUR looks soft and
could break down to new lows at any time. EUR/USD support at
$1.1025/50 looks vulnerable," they said.
(Editing by Andrew Heavens)