* Yen, Swiss franc fall from multi-month highs
* Euro pushed lower on dlr strength, shrugs off inflation
* China's yuan surges as traders look past Iran tensions
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds details, quotes, latest prices)
By Tommy Wilkes
LONDON, Jan 7 (Reuters) - The Japanese yen and Swiss franc
pulled back from recent highs on Tuesday as investors judged
that the chances of an all-out conflict between the United
States and Iran had fallen.
The safe-haven yen fell from a three-month high versus the
dollar, although sentiment remains fragile due to continued
worries about a further deterioration in relations between the
U.S. and Iran.
A U.S. drone strike in Baghdad on Friday killed Iranian
military commander Qassem Soleimani, widely seen as Iran's
second most powerful figure. The Swiss franc, another go-to currency when investors are
nervous, fell from four-month highs against the euro and dropped
versus the dollar.
Equity markets, which had weakened on Monday, rebounded.
"Since no further bad news from the Middle East followed,
markets have calmed down somewhat and panic moves like in the
USD or the JPY have been corrected," Commerzbank analysts said.
The dollar rose 0.1% to 108.46 yen, leaving the Japanese
currency some way from its high on Monday of 107.77 JPY=EBS .
The Swiss franc weakened 0.4% versus the dollar to 0.9712
francs CHF=EBS and 0.2% against the euro to 1.0860 francs
EURCHF=EBS .
The dollar, which fell on Monday, gained, with the euro down
0.2% to $1.1176 EUR=EBS .
The U.S. currency, the world's most liquid, is often bought
in times of market flux, but its performance has been mixed in
recent sessions - slightly better-than-expected euro zone
business survey data on Monday supported the euro.
Against a basket of currencies the dollar index firmed
marginally to 96.712 .DXY .
The euro was little moved by data showing inflation in the
euro zone had accelerated in December and retail sales were
stronger than expected. Recent survey data has pointed to improving investor and
business confidence in the euro zone.
"These are certainly positive signs and consistent at least
with tentative stabilisation and potentially some improvement in
activity heading into 2020. The improving euro-zone data flow is
providing more support for the euro," MUFG analysts said.
U.S. trade balance data, factory orders, and numbers from
the services sector are also due later.
Elsewhere, sterling bobbed around the $1.3160 GBP=D3 mark
ahead of the UK parliament returning following the Christmas
recess.
The onshore yuan CNY=CFXS rose to a five-month high of
6.9315 per dollar - a sign that traders are ready to put aside
concerns about a more significant confrontation between Tehran
and Washington.
The offshore yuan gained 0.5% to 6.9293 yuan per dollar
CNH=EBS , its highest since Dec. 13.
The U.S. and China are expected to sign a preliminary deal
on Jan. 15 to de-escalate a prolonged trade war.
Australia's dollar sunk 0.9% to $0.6876 AUD=D3 as markets
worried about the economic impact of deadly bushfires ravaging
the country.
U.S. dollar vs Japanese yen https://tmsnrt.rs/36HHzak
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(Editing by Ed Osmond)