By Tomo Uetake
SYDNEY (Reuters) - The dollar hovered below 2-1/2-month highs against the yen on Tuesday, failing to extend recent gains as optimism over trade negotiations between the world's two largest economies and for an orderly British exit from the European Union started to fade.
In Asian trade, the dollar eased marginally to 108.31 against the yen, still not far from its 2-1/2-month high of 108.63 yen marked on Friday.
The euro was flat at $1.1031 (EUR=) versus the greenback, off Friday's three-week high of $1.1062.
Although markets initially welcomed the "Phase 1" trade deal between the United States and China that President Donald Trump outlined last week, a lack of details kept many investors cautious.
"Media reports suggest China wants another high-level meeting later this month to finalize Friday's agreement, suggesting that not all the details are nailed down," said Alex Stanley, senior interest rate strategist at National Australia Bank.
"Market participants are conscious that previous U.S.-China 'agreements' have subsequently broken down amidst misunderstandings among the two sides."
A Bloomberg report on Monday, citing sources, said China wants more talks as soon as the end of October to hammer out the details of Trump's phase 1 deal before Chinese President Xi Jinping agrees to sign it.
China's yuan remained relatively firm versus the dollar in onshore trade, a day after it hit a two-month high of 7.0494. It last traded at 7.0738 per dollar, a touch lower on the day.
The offshore yuan traded at 7.0760 against the greenback, off Monday's one-month high of 7.0503.
Negotiations between the UK and the European Union over Britain's exit from the bloc also looked equally fleeting.
Sterling slipped from a three-month high touched on Friday as last week's euphoria gave way to doubts over whether a timely Brexit deal could be clinched. The pound was last quoted at $1.2611 versus the dollar, steady on the day.
A deal to smooth Britain's departure from the EU hung in the balance on Monday after diplomats indicated the bloc wanted more concessions from Prime Minister Boris Johnson and said a full agreement was unlikely this week.
Johnson says he wants to strike an exit deal at an EU summit on Thursday and Friday to allow an orderly departure on Oct. 31. If an agreement is not possible, he says he will lead the United Kingdom out of the club it joined in 1973 without a deal - even though parliament has passed a law saying he cannot do so.
The Turkish lira showed limited reaction after Trump imposed new sanctions on Turkey, but the currency stayed near seven-week lows against the dollar on concerns about a fallout from the country's incursion in northern Syria.
In Asian trade, the lira stood at 5.9240 per dollar , almost flat on the day, after having weakened some 0.8% on Monday.
Elsewhere, the Aussie and kiwi dollars struggled for traction on Tuesday as traders wondered what, if any, progress was being made in Sino-U.S. negotiations, while Australian policymakers again signaled they were ready to cut rates if needed.
The Aussie dollar stood flat at $0.6773 and the New Zealand dollar was a shade firmer at $0.6302.