* Dollar index at 76.949 vs 76.608late U.S. Friday
* U.S.-China trade spat dents risk appetite
* Yen hits 7-mth high of 90.18 yen per dollar (Recasts, adds quote, prices, changes dateline prvs TOKYO)
By Tamawa Desai
LONDON, Sept 14 (Reuters) - The dollar gained against most currencies on Monday as global stocks fell and investors fretted over a growing trade spat between the United States and China.
U.S. President Barack Obama announced safeguard duties on tyre imports from China on Friday, which will launch additional duties of 35 percent on Chinese-made types from Sept. 26.
China responded swiftly to the decision, saying it may complain to the World Trade Organisation and then announcing its own anti-dumping investigations of motor vehicles and chicken products from the United States.
"A trade war will not help the global economy and we believe this news is enough to dent a market positioned for recovery," said Chris Turner, head of FX strategy at ING.
The dollar index, a gauge for the greenback's performance against six major currencies, stood at 76.902, up from 76.608 in late U.S. trade on Friday and rebounding from a one-year low of 76.457 hit late last week.
The U.S. currency also gained against higher-yielding currencies such as the Australian and New Zealand dollars as speculators covered short positions that had pushed the greenback to one-year lows.
The Australian dollar fell 0.5 percent to $0.8587, retreating from Friday's high of $0.8677, a high of more than one year.
The New Zealand dollar slid 1.1 percent to $0.6987, off Friday's peak of $0.7089, also a high of more than one year.
New Zealand retail sales for July fell unexpectedly for the second month in a row, backing the central bank's view that recovery from recession was patchy.
But many analysts said the dollar rebound was a temporary blip in its downward trend, with the greenback recently undermined by falling Treasury yields and the view that it is replacing the yen as the funding currency for carry trades.
Persistent talk of Asian central banks diversifying from U.S. dollars to other currencies and assets, including gold, had also contributed to dollar selling last week.
"A rise in the dollar is nothing more than a technical rebound and the greenback's downtrend is unchanged," said Hideki Hayashi, global economist at Mizuho Securities.
"Given their yield advantages, the Australian and New Zealand dollars will continued to be preferred over the U.S. dollar."
The yen held steady in European trade after rising to a seven-month high against the dollar in Asia.
"Many large option barriers await the dollar/yen around 90 yen, which is likely to make the yen's rise slow-paced," said a forex trader at a Japanese trust bank.
The dollar was down 0.1 percent at 90.52 yen, having fallen earlier to 90.18 yen on EBS, its lowest since February.
The euro fell 0.2 percent to 131.86 yen partly as a 2.3 percent drop in Tokyo's Nikkei share average prompted Japanese investors to trim long positions.
The euro was flat at $1.4563. Traders said hedge funds sold the European currency earlier in the day to book profits on its rally to a 2009 peak of $1.4636 struck on trading platform EBS on Friday. (Additional reporting by Rika Otsuka in Tokyo)