Dollar falls vs yen as U.S. escalates global trade fight

By Tomo Uetake

TOKYO (Reuters) - The dollar edged lower against the yen in early Asian trade on Tuesday, hovering near a two-week low, as worries about an intensifying trade fight between the United States and its trade partners continued to hurt risk appetite.

Markets were buffeted by mixed messages from Washington on its international trade actions.

U.S. Treasury Secretary Steven Mnuchin said on Monday that forthcoming investment restrictions from the department will not be specific to China but would apply "to all countries that are trying to steal our technology."

However, that statement was contradicted by White House trade and manufacturing adviser Peter Navarro, who said that any investment restrictions proposed by the Trump administration would target China and not other countries.

The dollar pared some of its losses after Navarro's comments. It was last down 0.15 percent at 109.60 yen , after slipping to a two-week low of 109.365 on Monday.

"It looks like there are still several different opinions within the White House on proposed restrictions on foreign investment," said Tohru Sasaki, head of market research at JPMorgan Chase Bank in Tokyo.

"I think stock and currency markets are likely to stay nervous to trade-related headlines until July 6, when the Trump administration will announce its next moves on China."

The news added to the sense of caution felt after Trump on Friday threatened to impose a 20 percent tariff on cars imported from the European Union. The EU said it would be forced to retaliate.

The dollar index , which measures the greenback against a basket of six major currencies, stood at 94.263, moving further from its 11-month high hit last week.

The euro was flat in early Asian trade at $1.1705 , having risen to a more than one-week high of $1.1713 on Monday.

The euro's gains come after it strengthened on Friday following improved regional economic growth data and new assurances by Italian politicians that their nation would not leave the single currency.

Still, the single currency remains vulnerable to regional political instability as German Chancellor Angela Merkel faces pressure to deal with the migration dispute that has divided Europe and threatened her own government.

(Reporting by Tomo Uetake; Editing by Shri Navaratnam)