* Iran strikes at bases hosting U.S. forces in Iraq
* Yen jumps to three-month peak, then retreats
* Trump tweets: 'All is well!'
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Westbrook
SINGAPORE, Jan 8 (Reuters) - Currencies whipsawed on
Wednesday as the safe-haven yen first jumped on news of Iranian
missile strikes on bases hosting U.S. troops in Iraq, before
retreating as investors wagered it would not trigger a wider
conflict in the region.
More than a dozen ballistic missiles shot through the night
from Iranian territory toward the two Iraqi military bases. The
attack was a retaliation for the U.S. killing of Iranian
commander Qassem Soleimani, Iranian officials said.
The air strikes early on Wednesday came hours after the
general's funeral, and sent the yen to a three-month high -
until the absence of immediate reports of casualties steadied
nerves.
Twitter posts from both sides playing down the prospect of
further escalation also helped calm the currency market.
U.S. President Donald Trump tweeted that a damage assessment
was "So far, so good!" and said "all is well," promising a
further statement on Wednesday morning. Iranian Foreign Minister
Mohammad Javad Zarif Tweeted that the attack was "proportionate"
and that "we do not seek escalation or war."
Iraq's military said there were no casualties among Iraqi
military forces.
The yen JPY= , regarded as a haven in times of turmoil by
virtue of Japan's status as the world's biggest creditor, had
leapt as much as 0.8% to 107.63 per dollar. But by afternoon, it
was back only a little above where it began the day.
"If the market was really worried that the end of the world
was nigh, dollar/yen would have collapsed, and that's clearly
not been the case," said Stuart Oakley, global head of flow FX
at Nomura in Singapore.
The Swiss franc CHF= similarly gave back gains and so did
gold, by a lesser extent. The precious metal still sat at an
almost seven-year high XAU= , just below $1600 per ounce.
Investors' focus will now be on what response, if any, the
United States is planning.
"Essentially people are betting that this is not going to be
our main focus three months from now," said Westpac analyst Sean
Callow.
Oil prices, which initially jumped, fell back too as
analysts said market tension could ease as long as oil
production facilities remain unaffected by attacks. O/R
China's yuan CNH= , by afternoon, held on to most of
Tuesday's steep gains at 6.9460 per dollar, after a bumpy ride.
Elsewhere, the dollar mostly hung on to overnight gains on
other major currencies, and wound up steady against the Aussie
AUD=D3 , kiwi NZD=D3 , euro EUR= and pound GBP= after a
volatile session.
The greenback had been buoyed on Tuesday by a strong showing
in a non-manufacturing business survey, which had analysts
boosting fourth-quarter economic growth forecasts and looking
for strength from U.S. labour market data due on Friday.