* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Markets rattled by escalation in U.S.-China trade war
* Yen rises initially, then falls back
* Gold reaches highest level since April 2013
* Treasury yield curve inverts
(Adds Turkish lira, updates prices)
By Stanley White
TOKYO, Aug 26 (Reuters) - China's yuan hit an 11-year low in
onshore trade and tumbled to a record low in offshore trade
after a sharp re-escalation in the U.S.-China trade war whacked
investor confidence and darkened the global economic outlook.
The yen JPY= , often bought as a safe haven, briefly rose
to the highest against the dollar since a January flash crash.
But those gains were erased as Japanese importers sold yen,
which remained firmer against other currencies, a sign of waning
risk appetite.
Gold XAU= reached its highest level since April 2013, at
$1,554.56 per ounce.
The Turkish lira TRYTOM=D3 and emerging Asian currencies
also fell as investors fled to safer assets.
"China's economy is slowing, so the yuan will only fall
further unless authorities take steps to stop it," said Takuya
Kanda, general manager of the research department at Gaitame.com
Research Institute in Tokyo.
"Some dollar buying from Japanese importers pulled
dollar/yen off its lows, but excluding such real demand there's
no reason to buy the dollar. The yen will continue to rise."
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=D3 slid to 7.1850 yuan, the
weakest since international trading in the currency began in
2010.
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.
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 his demand that U.S. close Chinese operations.
In Asian trading, the benchmark 10-year U.S. Treasury yield
US10YT=RR fell to 1.4560%, its lowest in more than three
years. The yield curve inverted as yields on 2-year debt
US2YT=RR fell to 1.4568%.
Earlier this month, the yield curve inverted for the first
time in more than a decade when long-term yields traded below
short-term yields, which is commonly considered a signal of an
economic recession. Investors will watch to see if this section
of the curve inverts again.
The yen surged early in Asian trading to 104.46 per dollar,
the highest since January, before moving back to trade unchanged
on the day at 105.35.
"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 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.
The Australian dollar AUD=D4 , a liquid proxy for risk, was
down 0.3% to $0.6735 at 0449 GMT. An earlier level of $0.6690
was within a whisker of a recent decade-low of $0.66775.
The New Zealand dollar NZD=D4 slipped to $0.6342, a level
not seen since September 2015.
Against the yen, the Aussie briefly fell to 69.97 yen
AUDJPY= , the lowest since April 2009, before paring losses.
The kiwi skidded to 66.32 yen NZDJPY= , the lowest since
November 2012.