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FOREX-Dollar flat as market awaits U.S.-China trade news

(Recasts, adds analyst quote, updates prices)

By Kate Duguid

NEW YORK, May 8 (Reuters) - The dollar was flat on Wednesday as foreign exchange traders held off from making big moves as they awaited definitive news out of the trade talks between the United States and China which resume on Thursday.

Save for a bout of nerves on Monday following President Donald Trump's threat that he would raise tariffs on Chinese imports by Friday if a deal was not reached, currency market reactions have been muted as the deadline approaches.

"We're sitting on our hands waiting to hear news from the Chinese talks on trade," said John Doyle, vice president of dealing and trading at Tempus, Inc.

"It's a lot of wait-and-see and short little knee-jerk reactions to different headlines," he said. "It has been hard for the dollar to find any conviction."

Trump on Wednesday tweeted that he would be happy to keep tariffs on Chinese imports, prompting Beijing to threaten retaliation. China had backtracked late last week on almost all aspects of a draft trade agreement, threatening to blow up the negotiations, Reuters reported earlier in the day, citing U.S. government and private-sector sources.

But top Chinese negotiator Vice Premier Liu He will head to Washington for talks on Thursday, and some investors have interpreted Trump's tariff threats as a negotiating tactic.

Against a basket of its rivals, the dollar was 0.01% weaker at 97.621. Against the euro, it was also 0.01% lower, last at $1.119.

Other safe-haven currencies have benefited slightly more from the rising trade tension than the dollar. The Japanese yen was last 0.1% better at 110.13 per U.S. dollar and the Swiss franc was last 0.04% stronger at $1.020.

Data earlier showed China's trade surplus with the United States, a major irritant for Washington, expanded to $21.01 billion in April from a month ago, a factor that might provoke a hardening stance from U.S. officials.

The Chinese yuan in the offshore market edged 0.21% lower to 6.809 and was within striking distance of a four-month low hit on Monday.

"The threat of further escalation in the tariff war becomes real again and at the moment, it is just impossible to assign any probability to any scenario, positive or negative," Societe Generale strategists said in a note.

Elsewhere, the euro held flat against the dollar and within recent ranges as currency traders remained undecided on the inflationary outlook for the euro zone economy and the latest developments on the trade war front.

(Reporting by Kate Duguid and Saikat Chatterjee Editing by Alistair Bell and Chizu Nomiyama)