* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Markets rattled by escalation in U.S.-China trade war
* Yen, Swiss franc, and gold rise on risk aversion
* Traders braced for spike in volatility
By Stanley White
TOKYO, Aug 26 (Reuters) - The yen surged on Monday as
investors flocked to safe-haven assets after a sharp
re-escalation in the U.S.-China trade war, which whacked
investor confidence and darkened the global economic outlook.
The yuan also tumbled in offshore trade, weighed by
expectations of a deeper slowdown in China as the world's
two-largest economies exchanged barbs over trade.
The Swiss franc and gold, two assets sought during times of
heightened risk aversion, shot up in early Asian trade.
Financial markets could be in for a rough ride in the near
future as investors are likely to shift money from stocks to
less risky assets, such as debt, gold and safe-haven currencies.
"Speculators came into the market very early to put heavy
pressure on dollar/yen," said Yukio Ishizuki, foreign exchange
strategist at Daiwa Securities in Tokyo.
"The fact that the offshore yuan is down this much shows
speculators have gotten a little wild. The trade war is driving
all these moves, and I don't see this ending anytime soon."
The yen surged to 104.46 per dollar, the highest since a
flash crash this January, before paring gains to 104.70, up more
than 0.5%.
The yen will next target 104.10 per dollar, which is the
high it reached during a flash crash on Jan. 3 that roiled
financial markets, Daiwa Securities' Ishizuki said.
In the offshore market, the dollar CNH=D3 rose 0.6% to
7.1850 yuan, the highest on record.
U.S. stocks tumbled on Friday when President Donald Trump
announced an additional 5% duty on $550 billion in targeted
Chinese goods, hours after Beijing unveiled retaliatory tariffs
on $75 billion worth of U.S. products. At the G7 meeting in France over the weekend, Trump caused
some confusion by indicating he may have had second thoughts on
the tariffs.
The White House on Sunday clarified these comments, saying
Trump wished he had raised tariffs on Chinese goods even higher
last week, even as he signalled he did not plan to follow
through with demands that U.S. close Chinese operations.
The yen also surged around 1% versus the Australian
AUDJPY= and New Zealand dollars NZDJPY= .
The dollar fell 0.2% to 0.9729 Swiss franc CHF=EBS .
Spot gold also rose 1.4% to $1,548.93 per ounce XAU= .