FOREX-Yuan slips, yen gains as spread of China virus unnerves markets

* Fourth person dies from pneumonia in city of Wuhan
* Yuan down 0.6% vs dollar in offshore trade
* Safe havens yen, Swiss franc gain
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds Trump comments, adds quote, chart)
By Dhara Ranasinghe
LONDON, Jan 21 (Reuters) - China's yuan tumbled on Tuesday,
pulling away from six-month highs against the dollar, while the
safe-haven yen rallied as the spread of a pneumonia-like virus
in China sparked a sudden bout of risk aversion and rattled
world markets.
China reported a fourth death from a new coronavirus as the
number of cases continued to rise, just as hundreds of millions
of Chinese prepared to travel for the Lunar New Year holiday.
Global stocks fell as the outbreak rekindled memories of the
severe acute respiratory syndrome (SARS) in 2002-2003, another
coronavirus which broke out in China and killed nearly 800
people in a global pandemic. MKTS/GLOB
"You've got a stronger yen, a stronger Swiss franc and risk
aversion is setting in across everything," said Kit Juckes, an
analyst at Societe Generale. "It would be very surprising if it
was a trend-changer in terms of where things go from here, but
it is early days."
The yuan fell almost 0.7% in offshore trading to 6.9126 per
dollar CNH=D3 , off Monday's six-month highs. Onshore, the yuan
fell to its lowest in over a week at 6.9094 CNY=CFXS .
Currencies linked to Chinese trade and tourism also dropped.
The Australian dollar AUD=D3 touched its lowest in over a
month at $0.68445. The New Zealand dollar NZD=D3 fell as much
as a third of a percent to $0.6589 before recovering some
ground. The Korean won dropped 0.6% KRW= .
"The markets are attributing the selloff to concern about
the SARS-like virus in China, but it's difficult to know if it
is that or by and a large a reversal of the recent price
action," said Lee Hardman, a currency analyst at MUFG.
In contrast, the yen JPY=EBS gained 0.15% to 110.05 per
dollar as investors moved into safe-haven assets like the yean
and U.S. Treasuries US10YT=RR . The Swiss franc rose to 0.96750
to the dollar CHF=EBS .
The dollar index .DXY , which measures its value against a
basket of six currencies, was down at 97.481 -- near the highest
level in a month.
Speaking at the World Economic Forum in Davos, U.S.
President Donald Trump said negotiations with China over a
phase-two trade deal will start soon. The phase-one
deal signed last week boosted confidence in the world economic
outlook, supporting the dollar.
The euro and sterling gained against the dollar EUR=EBS
GBP=D3 .
Sterling benefited from news that Britain's economy created
jobs at its fastest rate in nearly a year in the three months to
November, potentially undermining the case for a Bank of England
interest rate cut next week.
The pound was last up 0.3% at $1.3053 GBP=D3 . The euro
held a narrow range around $1.1105 before Thursday's European
Central Bank meeting.
The mood among German investors brightened far more than
expected in January on hopes Germany's economy might not be hurt
as much by trade tensions as previously thought, a survey from
Germany's ZEW research institute showed.
Earlier on Tuesday, the Bank of Japan kept its short-term
interest rate target at minus 0.1% and its pledge to guide
10-year government bond yields around zero. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Chinese yuan rally stalls https://tmsnrt.rs/37f4RET
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