By Stanley White
TOKYO, July 17 (Reuters) - The dollar held onto gains against most currencies on Friday as worries that a resurgence in the coronavirus is starting to curb economic activity drew safe-haven flows into the U.S. currency.
The euro was well supported by hopes that European officials will agree on fiscal stimulus measures at a meeting starting later on Friday.
The yuan fell by the most in three weeks, undone by a steady increase in diplomatic frictions between the United States and China.
Some investors say they are beginning to see troubling signs in recent data that a relentless surge in coronavirus infections is threatening the U.S. economy.
Others point to deteriorating U.S.-China ties as a reason to avoid riskier trades, which should keep the dollar in demand for the time being.
"The dollar looks like a good safe haven now because of worries about a return to coronavirus lockdowns," said Minori Uchida, head ofglobal marketresearch at MUFG Bank.
"But I worry that the dollar will start to lose this status if long-term Treasury yields continue to fall."
The dollar stood at 107.22 yen JPY= on Friday, following a 0.3% gain in the previous session.
The euro EUR=D3 held steady at $1.1386 and was marginally higher against the British pound EURGBP= at 90.62 pence.
Sterling GBP= was little changed at $1.2569 on Friday.
The dollar was quoted at 0.9451 Swiss franc CHF=, close to the highest since July 3.
For the week, the dollar was on course for gains against the yen, sterling, and the Swiss franc due to safe-haven inflows.
Another jump in coronavirus infections has forced California and other U.S. states to at least partially shut down again, raising fears the economy and labour market will continue to struggle.
In addition, President Donald Trump's administration is considering banning travel to the United States by all members of the Chinese Communist Party, according to a person familiar with the matter, in a move that would surely put further strain on relations between Washington and Beijing.
This week the United States has ratcheted up the pressure on China in a wide-ranging dispute over civil liberties, access to technology, and territorial claims that some analysts liken to a new Cold War.
The yuan CNY=CFXS fell by the most since June 24 to 7.0006 to the dollar.
The euro will take centre stage later on Friday as European Union leaders will meet in Brussels as they seek to overcome their differences over a proposed stimulus package.
The stakes are high because the coronavirus pandemic has caused considerable damage and some short-term measures supporting the labour market will soon expire.
(Reporting by Stanley White; Editing by Gerry Doyle, Richard Pullin and Kim Coghill)
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