By Stanley White
TOKYO (Reuters) - The yen strengthened on Monday, thanks to bigger appetites for safe-haven assets as Washington and Beijing put additional tariffs on each other's exports, adding to the gloom hanging over the global economic outlook.
The United States slapped 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - while China imposed new duties on U.S. crude oil.
U.S. President Donald Trump said the two sides would still meet for talks later this month, but hopes for a resolution to the trade war have diminished.
"There are a lot of risk events this week from U.S. and Chinese economic data, which should help us see who is hurting more from the trade war, but we don't think a solution is imminent," said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank in Sydney.
Gold, which like the yen tends to find favour during uncertain times, also rose on Monday by the most in almost a week as investors were drawn to so-called risk-off trades. Declines in Asian shares also showed investors steering away from risk.
Risk sentiment could also take a hit due to ongoing protests in Hong Kong over China's rule of the city.
Foreign exchange trading could be subdued on Monday as U.S. financial markets are closed for the Labour Day holiday.
The dollar index (=USD) against a basket of six major currencies fell 0.01% to 98.809.
The yen rose around 0.1% versus to dollar to 106.15 in Asian trading.
The Japanese currency rose around 0.2% to 71.42 versus the Australian dollar (AUDJPY=) and advanced around 0.2% to 66.95 per New Zealand dollar (NZDJPY=).
Spot gold rose 0.39% to $1,525.25 per ounce.
Sentiment toward the yuan improved after a private survey on Chinese manufacturing in August beat market expectations, and Chinese shares managed to rise more than 1% on Monday.
China's factory activity unexpectedly expanded in August as production edged up, the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) survey showed on Monday, but orders remained weak, suggesting the improvement could be temporary.
In the onshore Chinese market, the yuan traded at 7.1603 per dollar, slightly weaker than its previous close of 7.1580.
In the offshore market, the yuan initially fell versus the dollar but managed to trim its losses to trade at 7.1686 yuan per dollar , down around 0.1%,
Data due this week includes a survey on Chinese services and August trade numbers on Sunday. There will be manufacturing and services surveys for the United States, which will also release data on its trade balance and non-farm payrolls.
The euro stood at $1.0992 (EUR=), up 0.01% in Asia, but sentiment toward the common currency was weak after it tumbled on Friday to its weakest in more than two years.
German Chancellor Angela Merkel's conservatives and her coalition partners held off a surge in far right support in two state elections in eastern Germany on Sunday.
The result averted an immediate political crisis in Europe's largest economy, but expectations are high that the European Central Bank will cut interest rates at its next monetary policy meeting on Sept. 12, which could weigh on the euro.
Sterling traded at $1.2159 , down 0.06% so far on the day.