* Yuan slides to record low in offshore markets
* Yen hits new 7-month high on risk aversion
* Trump says China wants to negotiate, mkts recover
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Aug 26 (Reuters) - China's yuan fell to an 11-year
low in the onshore market and a record low offshore on Monday
after the latest escalation in the U.S.-China trade war rattled
investor confidence.
President Donald Trump announced an additional 5% duty on
$550 billion in targeted Chinese goods on Friday, hours after
Beijing unveiled retaliatory tariffs on $75 billion worth of
U.S. products, sending stocks into a tailspin and investors
rushing for the safety of bond markets. At the G7 meeting in France over the weekend, Trump caused
some confusion by indicating he may have had second thoughts on
the tariffs.
On Monday he said China had contacted U.S. trade officials
to say they wanted to return to the negotiating table - those
comments helped the yuan off its lows. In China's onshore market, the yuan CNY=CFXS fell to
7.1500 per dollar, the lowest since February 2008.
In the offshore market, the yuan CNH=EBS slid to as low as
7.187 yuan, the weakest since international trading in the
currency began in 2010, before recovering to 7.1624 yuan - down
0.4% on the day - after Trump's upbeat comments on a trade deal.
In a sign that some calm had returned to markets, the
Japanese yen - which investors regard as a safe-haven - fell
0.4% to 105.76 JPY=EBS , having earlier hit a new seven-month
high of 104.46 earlier on Monday.
Commerzbank (DE:CBKG) analysts said "market sentiment has been
undoubtedly hit hard as there is an even lower chance of a trade
truce in the foreseeable future."
They said China could let the yuan "depreciate further to
ease the tariff pains, and somehow weaponize the currency to
anger Trump." Although they added that China would be reluctant
to allow any uncontrollable currency depreciation given it would
spur capital outflows and a massive hit to investors confidence.
Elsewhere, the dollar rebounded and was last up 0.3% against
a basket of currencies .DXY .
Versus the euro it rose 0.2% to $1.1115.
Writing before Trump's comments helped the dollar to
rebound, Marshall Gittler, a strategist at ACLS Global, noted
that the greenback was not behaving as a safe-haven currency.
"Today's move suggests that the market is beginning to
wonder if Trump isn't shooting himself and the US economy in the
foot with his endless trade war," he wrote.
The Turkish lira weakened around 1% to more than 5.8 against
the dollar on Monday after briefly plunging to 6.47 in what
market watchers described as a "flash crash" as Japanese
investors cut risk assets. The Australian dollar AUD=D3 , a liquid proxy for global
risk sentiment, earlier fell to $0.6690, within a whisker of a
recent decade-low of $0.66775, before recovering to $0.6750.
The New Zealand dollar NZD=D3 slipped 0.5% to $0.6342
overnight, a level not seen since 2015.
Sterling fell 0.3% to $1.2245 GBP=D3 , its moves driven
mostly by the dollar as investors waited for the next
developments in Britain's bid to get the European Union to
renegotiate its Brexit withdrawal agreement.