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FOREX-Yen, Swiss franc slide as China takes measures to limit virus impact

By Gertrude Chavez-Dreyfuss

* Yen, Swiss franc weakness signals ebbing virus fears * Offshore yuan at seven-week low, euro dragged downwards * China cuts reverse repo rates, injects liquidity * U.S. manufacturing index unexpectedly rises in January * Sterling tumbles after UK PM takes tough line in EU talks * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds new analyst comments, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Feb 3 (Reuters) - The safe-haven yen and Swiss franc declined on Monday, as risk sentiment improved and fears about the coronavirus eased after China took measures to cushion the economic impact of the new epidemic and pledged to do more to contain it. China's offshore yuan dropped to a more than seven-week low against the U.S. dollar on Monday, but trimmed its losses as New York trading got under way. After rising to multi-week highs against the dollar last week in the face of the coronavirus scare, the yen and Swiss franc took a pause from their climb as markets cheered China's efforts. China's central bank unexpectedly lowered interest rates on reverse repurchase agreements by 10 basis points and injected 1.2 trillion yuan ($174 billion) worth of liquidity into the markets via reverse repo operations on Monday. Chinese authorities also pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic. The crisis has so far claimed 361 lives in China and 1 in the Philippines. "There was a turnaround in risk sentiment as the sell-off in stocks and the buying of safe-havens last week were a bit overdone," said John Doyle, vice president of dealing and trading at Tempus, Inc in Washington. "But to be honest, I don't think there was any difference on the state of the virus between Friday and Monday. I guess markets like the fact that China is being pro-active in trying to contain the virus and in easing the impact on its economy," he added. Chinese markets still took a beating in the first trading session after an extended Lunar New Year break. The offshore yuan dropped as low as 7.023 yuan per dollar. The dollar was last up 0.2% against the Chinese currency at 7.014 yuan. In afternoon trading, the dollar rose 0.3% against the yen to 108.67, off a three-week low set on Friday. The dollar also extended gains versus the yen after data showed the Institute for Supply Management's U.S. manufacturing index unexpectedly rose in January. "With global growth stabilizing in recent months and domestic demand also starting to pick up, the ISM survey adds to the evidence that 2020 is likely to be a better year for U.S. manufacturers," said Andrew Hunter, senior U.S. economist, at Capital Economics in London. The Swiss franc also fell against the dollar, which climbed 0.3% to 0.9660 franc. Gains against the yen and Swiss franc pushed the dollar index up 0.4% at 97.805. The euro also fell 0.3% versus the dollar to $1.1062. Sterling, meanwhile, tumbled after Britain laid out a tough opening stance for future talks with the European Union following its departure from the bloc last week. Sterling was last down 1.6% at $1.3030, retracing all of its gains following the Bank of England's decision last week to keep interest rates on hold. ======================================================== Currency bid prices at 3:13 PM (2013 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1060 $1.1093 -0.30% -1.34% +1.1095 +1.1037 Dollar/Yen JPY= 108.6800 108.3800 +0.28% -0.17% +108.7900 +108.3200 Euro/Yen EURJPY= 120.21 120.20 +0.01% -1.43% +120.3700 +119.9300 Dollar/Swiss CHF= 0.9662 0.9630 +0.33% -0.17% +0.9668 +0.9631 Sterling/Dollar GBP= 1.2998 1.3199 -1.52% -1.97% +1.3214 +1.2983 Dollar/Canadian CAD= 1.3294 1.3235 +0.45% +2.37% +1.3303 +1.3228 Australian/Doll AUD= 0.6689 0.6691 -0.03% -4.73% +0.6707 +0.6682 ar Euro/Swiss EURCHF= 1.0688 1.0688 +0.00% -1.51% +1.0693 +1.0664 Euro/Sterling EURGBP= 0.8509 0.8400 +1.30% +0.64% +0.8519 +0.8401 NZ NZD= 0.6463 0.6462 +0.02% -4.05% +0.6476 +0.6454 Dollar/Dollar Dollar/Norway NOK= 9.2830 9.1991 +0.91% +5.75% +9.2892 +9.1852 Euro/Norway EURNOK= 10.2677 10.2180 +0.49% +4.37% +10.2746 +10.1748 Dollar/Sweden SEK= 9.6459 9.6261 -0.04% +3.19% +9.6709 +9.6167 Euro/Sweden EURSEK= 10.6702 10.6747 -0.04% +1.92% +10.6911 +10.6510 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve Orlofsky and Nick Zieminski)