FOREX-Dollar stable after competing reports on U.S.-China trade talks

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(Recasts, updates yields, adds trade talk news)

By Kate Duguid

NEW YORK, Jan 17 (Reuters) - The U.S. dollar was left flatin Thursday afternoon trade after first rising on a report thatU.S. Treasury Secretary Steven Mnuchin had considered easingtariffs imposed on Chinese imports, then retracing those gainsafter his office denied the claim.

The dollar index .DXY initially rose 0.07 percent to96.124, until a repudiation of the report from the Treasurysecretary's office left the index last at 96.058, unchanged fromthe previous day's close.

Earlier, the greenback rose against a euro dragged lower bysoft economic data, while the pound took off on hopes of asecond referendum on Britain's membership in the European Union.

Against the euro, the dollar EUR= strengthened as much as$1.1367, its highest in nearly two weeks. It was last at $1.139,with the single currency still weaker on soft data out of theeuro zone. Inflation data for the European Union showed pricepressures receding further from the central bank's target,complicating the situation for the European Central Bank whichcurrently expects to raise interest rates later this year.

The euro has fallen 0.70 percent against the dollar sinceTuesday morning, when Germany reported its economy grew by 1.5percent in 2018, the weakest rate of expansion in five years. urn:newsml:reuters.com:*:nL8N1ZD0OJ

"The data that has been coming out of Europe this week hascertainly been on the softer side and suggests that from aneconomic standpoint they are technically in a recession," saidDean Popplewell, chief currency strategist at Oanda.

The British pound rose to a two-month high against the euro EURGBP= , extending recent gains on growing expectationsBritain can avoid a no-deal withdrawal from the European Union.Talk of a second referendum vote in the UK sparked a rally inafternoon trade which further lifted the currency.

Prime Minister Theresa May has been meeting lawmakers fromall parties in an attempt to find a way out of an impasse overhow Britain should leave the EU, after May's own plan wasresoundingly rejected by parliament on Tuesday. While she hasrepeatedly rejected a second referendum, a vocal campaign infavor of holding a new vote has the support of some lawmakers. urn:newsml:reuters.com:*:nL8N1ZH1M1urn:newsml:reuters.com:*:nL8N1ZH5OP

The pound GBP= also firmed toward a two-month high againstthe dollar. It was trading 0.77 percent up at $1.299, itshighest since Nov. 15. (Reporting by Kate Duguid in New York and Ritvik Carvalho inLondon; editing by Susan Thomas and Tom Brown) ((kate.duguid@thomsonreuters.com; +1-646-223-6118; ReutersMessaging: kate.duguid@thomsonreuters.com@thomsonreuters.net))

This article appears in: Politics , Stocks , World Markets , Economy
Referenced Symbols: EFX ,

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