* Dollar gives up gains vs most major currencies
* Euro rebounds, eyes on EU recovery fund talks
* Sterling withers as UK GDP disappoints
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds details, new quotes, latest prices)
By Tommy Wilkes
LONDON, July 14 - The U.S. dollar gave up early gains on
Tuesday with currency traders unfazed by diplomatic tensions
between the United States and China and rising coronavirus
cases.
While stock markets initially fell as investors turned
cautious, the safe-haven yen and the Swiss franc were both down
on the day by 1105 GMT as market sentiment improved.
A resurgence of novel coronavirus infections has caused some
areas to place new restrictions on business activity, injecting
some caution into the multi-month stock market rally that is
betting on a rapid economic recovery. Markets now face an additional threat from tit-for-tat
retaliation between Washington and Beijing over access to U.S.
financial markets, civil liberties in Hong Kong and territorial
claims in the South China Sea.
ING analysts said that while the nervousness was supporting
the dollar, progress in the European Union's efforts to agree a
recovery fund package this week would boost the euro.
Against a basket of currencies the dollar index was last
down 0.1% at 96.452 =USD , keeping it firmly with a tight range
it has traded in since May.
The euro recovered and rose 0.2% against the dollar to
$1.1369 EUR=EBS .
The single currency's rise came despite a widely-watched
indicator showing investor sentiment in the euro zone's biggest
economy, Germany, worsened somewhat in July. Traders are now waiting for U.S. inflation numbers for June
due at 1230 GMT.
Scotiabank analysts said in a research note that currencies
were now less correlated with equity market trends, which could
mean they return to being driven by macroeconomic developments.
"If so, we think that this should support further gains in
the euro and related currencies given that Europe appears to
have managed and contained the COVID-19 outbreak more
effectively than the US, for example, implying better economic
prospects and more attractive investment returns," they said.
Currencies heavily exposed to global trade sentiment
rebounded as the day wore on. The Australian dollar rose 0.3% to
$0.6957 AUD=D3 , although China's offshore yuan slipped
slightly to 7.0184 yuan per dollar CNH=EBS .
The yuan was little moved by data showing Chinese imports in
June rose for the first time since the coronavirus panic
paralysed the economy, as investors focused on tensions with
Washington. The Japanese yen dipped, with the dollar up 0.1% at 107.41
yen JPY=EBS .
The British pound fell after the economy rebounded in May at
a much slower-than-expected pace, calling into question
forecasts for a V-shaped recovery. Sterling was last down 0.3%
at $1.2520 GBP=D3 and 0.5% against the euro at 90.79 pence
EURGBP=D3 . <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. dollar index https://tmsnrt.rs/3fDHRU8
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Mark Potter, William Maclean)