Longer-dated U.S. Treasury yields hit multi-year highs IMF cuts...

• Longer-dated U.S. Treasury yields hit multi-year highs
• IMF cuts world growth forecasts on tariffs, EM strain
• Yuan stabilizes near seven-week lows amid liquidity squeeze
• Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

(New throughout, updates prices, market activity and comments; new byline, changes dateline, previous LONDON)

The dollar rose on Tuesday, boosted by rising U.S. bond yields to a seven-week peak against a basket of currencies, as the euro weakened further on worries about the tension between the European Union and Italy over that country's budget.

The Chinese yuan steadied near a seven-week low against the greenback as a liquidity squeeze in the offshore yuan market in Hong Kong helped stabilize sentiment.

"The rise in U.S. yields is much more important" to the day's foreign exchange trading than Italy's fiscal problems, said Thomas Flury, head of currency strategy at UBS Global Wealth Management's Chief Investment Office in Zurich. "The market needs to digest this to see whether it's a long-term spike."

Investors dumped U.S. bonds last week on fears that domestic inflation might accelerate, prompting the Federal Reserve to hasten the pace of interest rate hikes.

On Tuesday, the benchmark 10-year Treasury yield US10YT=RR climbed to a seven-year high at 3.261 percent before receding a tad.

An index that tracks the dollar versus six major currencies .DXY was up 0.08 percent at 95.839 after hitting a seven-week peak at 96.155.

Sparring between Washington and Beijing on trade and Italy's proposed hefty debt target have stoked worries about slowing global growth, feeding safe-haven demand for the dollar.

The International Monetary Fund on Tuesday reduced its global growth forecasts for 2018 and 2019 to 3.7 percent from 3.9 percent for both years.

Earlier, Italian Economy Minister Giovanni Tria struck a resolute tone on his controversial budget plans in Rome's parliament. Italy's benchmark 10-year government bond yield rose toward a 4-1/2-year high.

While the spike in Italian yields has not spread to other peripheral government debt, "it hurts the sentiment in Europe somewhat," Flury said.

The euro EUR=EBS fell to a seven-week low of 1.14325. It was last at 1.14850, down 0.05 percent. The single currency EURJPY=EBS was down -0.01 percent at 130.130 yen.

A surging greenback is hurting emerging markets as they struggle with tighter liquidity and capital outflows.

The Indian rupee INR= fell to an all-time low of 74.395 per dollar.

The Chinese offshore yuan CNY=D4 fell to 6.9350 yuan per dollar before retracing to 6.9239, which was marginally weaker on the day.

At the weekend, China's central bank cut requirements on bank reserves in a bid to add more liquidity into its banking system as policy-makers worried about the economic impact of a heated trade row with the United States.

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	Currency bid prices at 10:30AM (1430 GMT) 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	  EUR=		$1.1477		$1.1490	 -0.11%		 +0.00%	  +1.1502	 +1.1432 
 Dollar/Yen	   JPY=		113.2800	   113.2300	+0.04%		 +0.00%	  +113.3900   +112.9400 
 Euro/Yen		 EURJPY=	 130.07		 130.10	  -0.02%		 +0.00%	  +130.2300   +129.3500 
 Dollar/Swiss	 CHF=		0.9934		 0.9925	  +0.09%		 +0.00%	  +0.9955	 +0.9922 
 Sterling/Dollar  GBP=		1.3090		 1.3088	  +0.02%		 +0.00%	  +1.3107	 +1.3034 
 Dollar/Canadian  CAD=		1.2967		 1.2963	  +0.03%		 +0.00%	  +1.3003	 +1.2953 
 Australian/Doll  AUD=		0.7079		 0.7076	  +0.04%		 +0.00%	  +0.7093	 +0.7055 
 ar																							  

 Euro/Swiss	   EURCHF=	 1.1405		 1.1404	  +0.01%		 +0.00%	  +1.1415	 +1.1370 
 Euro/Sterling	EURGBP=	 0.8768		 0.8775	  -0.08%		 +0.00%	  +0.8791	 +0.8761 
 NZ Dollar/Dolar  NZD=		0.6450		 0.6446	  +0.06%		 +0.00%	  +0.6463	 +0.6428 
 Dollar/Norway	NOK=		8.2753		 8.2757	  +0.00%		 +0.00%	  +8.3072	 +8.2508 
 Euro/Norway	  EURNOK=	 9.5026		 9.5103	  -0.08%		 +0.00%	  +9.5165	 +9.4822 
 Dollar/Sweden	SEK=		9.1176		 9.0848	  +0.27%		 +0.00%	  +9.1451	 +9.0712 
 Euro/Sweden	  EURSEK=	 10.4691		10.4406	 +0.27%		 +0.00%	  +10.4821	+10.4223 
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Italy-Germany spread and Euro	http//reut.rs/2OP5C1o 

Trade tensions in China's stock, currency markets http//tmsnrt.rs/2PlCZGr

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