FOREX-Italian concerns weigh down euro after Salvini comments

* Italy's Salvini says may break EU rules
* Trump says trade deal with China still likely
* Sterling slips on weak wage growth

(New throughout, updates trading and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
By Karen Brettell
NEW YORK, May 14 (Reuters) - The euro slid against the
dollar on Tuesday after Italy's deputy prime minister said the
country is ready to break European Union budget rules if
necessary to spur employment.
"If we need to break some limits, like the 3%
(deficit-to-GDP ratio) or 130-140% (debt-to-GDP ratio), we're
ready to go ahead. Until we arrive at 5% unemployment, we will
spend everything that we should and if someone in Brussels
complains, that won't be our concern," Matteo Salvini said.
“There are renewed Italian concerns,” said Win Thin, global
head of currency strategy at Brown Brothers Harriman in New
York. “It looks like things are coming back to a head.”
The dollar was also buoyed as U.S. and Chinese officials
said the two countries would continue to negotiate on trade.
U.S. President Donald Trump on Tuesday defended his trade
war with China as tensions escalated and markets extended their
losses, promising a deal with Chinese President Xi Jinping soon,
even as fears escalated about a protracted battle. Continuing uncertainty over whether an agreement is likely
should support safe-haven currencies, including the dollar and
the Japanese yen, said Thin.
“There is too much uncertainty," Thin said. "I think things
will get worse before they get better.”
Investors are also focused on whether Trump will impose
tariffs on imported cars and auto parts as talks continue with
the EU and Japan.
Trump received a "Section 232" investigation report in
February, widely believed to have concluded that car and auto
part imports pose a risk to national security. The president's
90-day deliberation period is due to end on
Saturday. Sterling dipped to two-week lows as British employment data
showed wage growth in the quarter ending March was lower than
expected, signaling the possible start of a turbulent period for
the broader economy. The British currency is also being weighed down by concerns
about Britain's exit from the European Union.
Britain's opposition Labour Party said on Tuesday that Prime
Minister Theresa May had not yet made a shift in Brexit talks
and that the party was concerned a future Conservative leader
could renege on any promises made by the current government.
Currency bid prices at 8:20AM (1220 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1212 $1.1223 -0.10% -2.24% +1.1246 +1.1209
Dollar/Yen JPY= 109.5500 109.3000 +0.23% -0.64% +109.7700 +109.1500
Euro/Yen EURJPY= 122.82 122.64 +0.15% -2.69% +123.3900 +122.5900
Dollar/Swiss CHF= 1.0075 1.0063 +0.12% +2.66% +1.0085 +1.0052
Sterling/Dollar GBP= 1.2933 1.2955 -0.17% +1.38% +1.2970 +1.2924
Dollar/Canadian CAD= 1.3473 1.3475 -0.01% -1.20% +1.3487 +1.3455
Australian/Doll AUD= 0.6941 0.6943 -0.03% -1.52% +0.6959 +0.6940
ar
Euro/Swiss EURCHF= 1.1298 1.1294 +0.04% +0.39% +1.1329 +1.1289
Euro/Sterling EURGBP= 0.8668 0.8659 +0.10% -3.53% +0.8691 +0.8655
NZ NZD= 0.6577 0.6566 +0.17% -2.08% +0.6590 +0.6565
Dollar/Dollar
Dollar/Norway NOK= 8.7379 8.7678 -0.34% +1.15% +8.7707 +8.7195
Euro/Norway EURNOK= 9.8006 9.8375 -0.38% -1.06% +9.8496 +9.7956
Dollar/Sweden SEK= 9.6139 9.6354 -0.33% +7.25% +9.6448 +9.5857
Euro/Sweden EURSEK= 10.7803 10.8160 -0.33% +5.03% +10.8260 +10.7710