FOREX-Yuan strengthens on trade talk hopes

* Yuan and Aussie dollar recover slightly
* Yen, Swiss franc slip as sentiment lifted
* Euro zone industrial production for March due at 0900GMT
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates prices)
By Tom Finn
LONDON, May 14 (Reuters) - China's yuan and the Australian
dollar regained some poise on Tuesday after U.S. President
Donald Trump suggested trade talks with Beijing could yet make
headway.
The Chinese currency sank to a 2019 low of 6.92 on Monday
after Washington and Beijing increased tariffs on each other's
goods.
It broke a six-day losing streak on Tuesday, rising 0.25% as
broader sentiment also stabilised after Trump said he expected
Sino-U.S. trade negotiations to be successful. China would be likely to intervene to stop any yuan plunge
through 7 to the dollar and could sell its vast holdings of
Treasuries as a negotiating tactic against Washington.
Analysts are trying to gauge what the net effect of
permanent U.S. tariffs on Chinese imports would be on the
dollar.
The only obvious impact on currencies is elevated risk
aversion which tends to benefit conventional safe havens such as
the Swiss franc and the Japanese yen.
"Trade wars do not benefit the dollar. If you look at (how)
the yen/dollar pair reacted to China announcing tariffs on U.S.
goods it was clearly not positive for U.S. assets," said Viraj
Patel, a currency strategist at Arkera, a financial technology
firm.
The Australian dollar firmed a tenth of a percent to $0.6952
AUD=D4 after brushing its lowest since early January earlier
in the session.
The Aussie is often seen as a proxy for Chinese growth
because of Australia's export-reliant economy and China being
the main destination for its commodities.
The euro rose 0.15% to $1.1238 EUR=EBS .
"The euro has been resilient despite the latest bout of
trade tensions and it's probably down to people who were short
euros vs emerging market currencies and are now buying euro back
and unwinding euro hedges," said Stephen Gallo, European head of
FX strategy at BMO Capital Markets in London.