* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Risk-on sentiment weakens yen
* Euro regains composure after wild ride post-ECB
* Traders eye Fed, BOJ policy moves(Updates levels throughout, adds offshore yuan)
By Stanley White
TOKYO, Sept 13 (Reuters) - The yen was pinned near asix-week low versus the dollar on Friday as signs the UnitedStates and China were narrowing their differences over tradeahead of key talks decreased demand for safe haven assets.
That nudged the yuan up to near four-week highs against theU.S. currency in offshore trade, while the euro held steadyafter swinging wildly on Thursday following the European CentralBank's surprise decision to resume government debt purchasesfrom November to support a flagging economy.
In the very short-term, guarded optimism about a resolutionto the U.S.-China trade war should continue to push Treasuryyields higher and weigh on safe-haven currencies.
However, this confidence could be short-lived as the U.S.Federal Reserve is widely expected to cut interest rates nextweek while the ECB's easing places pressure on the Bank of Japanto follow suit.
"We've managed to scale back our pessimism about U.S.-Chinatrade talks, which is a supportive factor for now," said TakuyaKanda, general manager of research at Gaitame.com ResearchInstitute in Tokyo.
"Once we start to focus on the Fed's rate cut, perceptionsof the market will change. Treasury yields and dollar/yen lookto be too high and are likely to start drifting lower."
The dollar rose to 108.265 yen, the highest sinceAug. 1.
The greenback was up 1.2% versus the yen this week, oncourse for its best weekly performance since November 2018.
The dollar has also drawn support from a spike in U.S.Treasury yields, with the benchmark 10-year yield at a five-weekhigh.
U.S. President Donald Trump said on Thursday he would notrule out an interim trade pact with China.
The two sides are preparing for new rounds of talks aimed atcurbing their trade war, which has dragged on for more than ayear, roiling financial markets and threatening to push othereconomies into recession.
The yen, widely considered a safe-haven currency, tends torise during times of heightened economic or market stress andvice versa.
China's financial markets were closed for a public holidayon Friday. In offshore trade, the yuan rose 0.3% versus thedollar to 7.0459, the strongest since Aug. 19.
Sterling was up 0.3% on the dollar this week, oncourse for its second week of gains after the British Parliamentmoved to block a so-called no-deal exit from the European Union.
The pound remains vulnerable, however, given the continuinguncertainty over how lawmakers will decide the terms of the UK'sdivorce from the EU.
The euro held steady at $1.1068, on course for itssecond weekly gain against the dollar.
The single currency initially tumbled on Thursday after theECB cut its deposit rate by 10 basis points to a record low ofminus 0.5% and said it would restart bond purchases at a rate of20 billion euros a month from Nov. 1.
The rate cut was widely expected, but the revived bondpurchases were a surprise. Still, the euro managed to claw backlosses as the ECB's comprehensive stimulus package now shiftsthe spotlight to the Fed and BOJ policy meetings next week.
Financial markets have fully priced in a rate cut at theFed's Sept. 17-18 policy meeting. Most economists expectadditional monetary policy easing in October and December.
The Fed cut rates in July for the first time since 2008.
Trump has publicly criticised the Fed for not cutting ratesmore aggressively, but positive economic data has cast somedoubt on the need for extensive easing.
The BOJ is also brainstorming ways to deepen negativeinterest rates at minimal cost to commercial banks, as itconsiders adopting it as a main policy response to a slowingeconomy, sources familiar with the bank's thinking said.
The BOJ's next policy decision is due Sept. 19.(Reporting by Stanley White; Editing by Sam Holmes & ShriNavaratnam)