* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Prolonged U.S.-China trade war boosts safe-havens
* Traders worry about U.S.-China relations
* Yuan eases slightly in offshore trade
By Stanley White
TOKYO, Nov 21 (Reuters) - The yen rose against the dollar on
Thursday after sources close to the White House told Reuters
that a U.S.-China trade deal is unlikely this year, shattering
investor hopes a partial agreement was imminent and spurring
demand for safe havens.
The yuan fell to a three-week low in onshore trade on
worries the failure to reach a deal to roll back U.S. tariffs
could further harm China's stuttering economy.
Political tensions between Beijing and Washington were also
keeping investors on edge after a source told Reuters that U.S.
President Donald Trump is expected to sign into law two bills
intended to support anti-government protesters in Hong Kong.
Hong Kong has been rocked by months of increasingly violent
protest against Chinese rule of the former British colony. The
passage of a U.S. law supporting the protesters is bound to
anger Beijing and potentially undermine efforts to secure a
trade deal.
"Friction between the United States and China is starting to
spread from trade to questions about China's human rights," said
Tsutomu Soma, general manager of fixed income business solutions
at SBI Securities Co in Tokyo.
"This is the perfect opportunity to book some profits and
unwind some risk-on trades, which is supportive for the yen and
government bonds."
The yen JPY=EBS rose 0.15% to 108.46 per dollar on
Thursday.
The Japanese currency briefly pared gains after Bloomberg
reported Chinese Vice Premier Liu He as saying he is cautiously
optimistic about a preliminary trade deal. Markets, however,
turned around again when it became clear the comments were made
on Wednesday night in Beijing.
The dollar was steady at $1.1077 versus the euro EUR=EBS
and was quoted at $1.2931 against the British pound GBP=D3 .
Completion of a "phase one" U.S.-China trade deal could
slide into next year, trade experts and people close to the
White House told Reuters on Wednesday, as Beijing presses for
more extensive tariff rollbacks, and the Trump administration
counters with heightened demands of its own. Trump and U.S. Treasury Secretary Steven Mnuchin said in an
Oct. 11 news conference that an initial trade deal could take as
long as five weeks to ink.
Just over five weeks later, a deal is still elusive, and
negotiations may be getting more complicated, trade experts and
people briefed on the talks told Reuters.
Washington and Beijing have imposed tariffs on each other's
goods in a bitter dispute over Chinese trade practices that the
U.S. government says are unfair.
The tariffs have slowed global trade, raised the risk of
recession for some economies, and roiled financial markets.
The next date to watch is Dec. 15, when U.S. tariffs on some
$156 billion in Chinese goods are scheduled to take effect.
Spot gold XAU= , which like the yen is often bought as a
safe-haven during times of uncertainty, tacked on 0.1% to
$1,473.93 per ounce, underlining investors' reluctance to take
on risk.
In the onshore market, the yuan CNY=CFXS fell to 7.0450
versus the dollar, the weakest since Nov. 1, before steadying at
7.0400. Offshore, the yuan CNH=D3 slipped to 7.0533 per
dollar, the lowest since Nov. 5, and then pared its losses.
Besides the tariff row, Hong Kong has emerged as another
flashpoint that some traders say could further worsen U.S.-China
relations.
What started as a protest against a proposed China
extradition bill has widened into almost daily battles with the
Hong Kong police over a perceived erosion of liberties under
Chinese rule. The police have come under criticism after one
protestor was shot at close range.
Beijing denies meddling in Hong Kong's affairs and blames
foreign governments for fuelling the unrest.