* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (New throughout, updates prices, market activity and comments)
By Kate Duguid
NEW YORK, Aug 26 (Reuters) - The U.S. dollar strengthened on Monday, recovering from overnight losses after the United States and China sought to ease trade war tensions.
President Donald Trump, on the sidelines of the G7 summit of world leaders in France, said Chinese officials had contacted U.S. trade counterparts overnight and offered to return to the negotiating table. Vice Premier Liu He, who has been leading the talks with Washington, said China was willing to resolve the trade dispute through "calm" negotiations.
In overnight trade prior to these remarks, China's yuan had fallen to an 11-year low in the onshore market and a record low offshore and the U.S. dollar fell to a 2-1/2 year low against the Japanese yen.
The currency market had been reacting to Trump's announcement on Friday of an additional 5% duty on $550 billion in targeted Chinese goods, hours after Beijing unveiled retaliatory tariffs on $75 billion worth of U.S. products, sending stocks into a tailspin and investors rushing for the safety of bond markets.
Trump's attempt on Monday to limit the fallout helped lift the yuan off its lows. The dollar index recovered, last up 0.43% at 9798.061.
"It has been a bit of a roller coaster. We had the dollar opening up quite weak in Asia last night. Then a number of things have happened to reverse that, including dollar/CNH pushing higher," said Daniel Katzive, head of foreign exchange strategy for North America at BNP Paribas.
"Of course, most importantly," he said, were "the more optimistic comments from the president on the China trade relationship."
In China's onshore market, the yuan fell to 7.1525 per dollar, the lowest since February 2008.
In the offshore market, the yuan slid as low as 7.1858 yuan, the weakest since international trading in the currency began in 2010, before recovering to 7.1681 yuan - down 0.49% on the day.
In a sign that some calm had returned to markets, the Japanese yen - which investors regard as a safe-haven - fell 0.7% to 106.12, having earlier hit a 2-1/2-year high of 104.44.
"I think market uncertainty around trade is going to remain very elevated in the best case scenarios. It should ultimately mean that currency pairs like dollar/yen continues to push lower because Japanese investors have big exposures to global markets and if markets are more volatile, they'll be more cautious about maintaining their FX exposure," said Katzive. (Reporting by Kate Duguid in New York and Tommy Wilkes in London; Editing by David Gregorio)