By Stanley White
TOKYO (Reuters) - The yen rose against the dollar on Thursday after sources close to the White House told Reuters that a U.S.-China trade deal is unlikely this year, which spurred demand for safe-haven assets.
The yuan eased toward a two-week low in offshore trade as failure to reach a deal to roll back U.S. tariffs would cause a further slowdown in China's economy and complicate efforts to keep growth on track.
Some traders are also wary of risk after U.S. lawmakers sent two bills intended to support protesters in Hong Kong to the White House for U.S. President Donald Trump to sign or veto.
Hong Kong has been rocked by months of increasingly violent protest against Chinese rule of the former British colony. If the bills are signed into law, that would anger Beijing and could make a resolution to the trade war more difficult.
"Friction between the United States and China is starting to spread from trade to questions about China's human rights," said Tsutomu Soma, general manager of fixed income business solutions at SBI Securities Co in Tokyo.
"This is the perfect opportunity to book some profits and unwind some risk-on trades, which is supportive for the yen and government bonds."
The yen <JPY=EBS> rose 0.14% to 108.49 per dollar on Thursday.
The dollar weakened slightly to $1.1077 versus the euro <EUR=EBS> but held steady at $1.2923 against the British pound <GBP=D3>.
Completion of a "phase one" U.S.-China trade deal could slide into next year, trade experts and people close to the White House told Reuters on Wednesday, as Beijing presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.
Trump and U.S. Treasury Secretary Steven Mnuchin said in an Oct. 11 news conference that an initial trade deal could take as long as five weeks to ink.
Just over five weeks later, a deal is still elusive, and negotiations may be getting more complicated, trade experts and people briefed on the talks told Reuters.
Washington and Beijing have imposed tariffs on each other's goods in a bitter dispute over Chinese trade practices that the U.S. government says are unfair.
The tariffs have slowed global trade, raised the risk of recession for some economies, and roiled financial markets.
The next date to watch is Dec. 15, when U.S. tariffs on some $156 billion in Chinese goods are scheduled to take effect.
Spot gold <XAU=>, which like the yen is often bought as a safe-haven during times of uncertainty, rose 0.25% to $1,474.82 per ounce, underlining investors' reluctance to take on risk.
In the offshore market, the yuan <CNH=D3> eased slightly to 7.0452 per dollar, close to the lowest in more than two weeks.
In addition to trade policy, Hong Kong has emerged as another flashpoint that some traders say could trigger a further worsening in U.S.-China relations, which raises doubts about whether the world's two-largest economies can de-escalate their standoff.
What started as a protest against a proposed China extradition bill has widened into almost daily battles with the Hong Kong police over a perceived erosion of liberties under Chinese rule. The police have come under criticism of their tactics after one protestor was shot at close range.
Beijing denies meddling in Hong Kong's affairs and blames foreign governments for fuelling the unrest.
(Reporting by Stanley White; Editing by Lisa Shumaker)