FOREX-Dollar hits 1-week high vs yen as risk sentiment improves

* China and U.S. moving closer to trade deal -report

* Dollar index edges higher

* Pound gains as Conservative vote lead promises end to political uncertainty

* (New throughout, updates rates, adds comments post-U.S. market open; new byline, changes dateline; previous LONDON)

NEW YORK, Nov 25 (Reuters) - Positive news on the Sino-U.S. trade front lifted market sentiment on Monday, driving the U.S. dollar to a one-week high against the safe-haven yen, while the British pound rose as election polls over the weekend continued to show a sizeable lead for the Conservative party.

China and the United States are very close to a “phase one” trade deal, the Global Times, a tabloid run by the ruling Communist Party’s official People’s Daily, said on Monday, discounting “negative” media reports.

Against the yen, which tends to strengthen during times of geopolitical or financial stress due to Japan’s standing as the world’s biggest creditor, the dollar was 0.28% higher at 108.94 yen, a 1-week high.

Market sentiment was also helped by news over the weekend that China was seeking to raise substantially the upper limits for intellectual property violation fines.

Optimism that a trade deal will be reached to end the damaging U.S-China trade war boosted risk appetite and reduced demand for safe-haven bonds.

“It seems there’s now cause for optimism again after reports that China is open to tightening rules on intellectual property, with Chinese state media claiming a deal is now close,” Craig Erlam, senior market analyst at OANDA, said in a note.

“Unfortunately, we’ve been here so many times before I’m struggling to get particularly excited,” Erlam added.

Despite the weakness on Monday, the safe-haven yen was likely to remain in demand, Shaun Osborne, chief FX strategist at Scotiabank in Toronto, said in a note.

“Constructive market sentiment is based on fragile foundations; it would appear and we expect the JPY, for example, to remain well-supported on dips while trade tensions simmer,” Osborne said.

The dollar index, which compares the dollar against six major currencies, was up 0.09% at 98.355.

The dollar has been well-supported in recent weeks as continued trade-related tensions led investors to back the greenback. Investors view the United States relatively well-positioned to weather a full-blown trade war should there be one.

Speculators raised net long bets on the dollar to a five-week high in the week to Nov. 19, data from the U.S. Commodity Futures Trading Commission showed.

Sterling climbed back above $1.29 on Monday, drifting further from recent lows, as polls continued to show the ruling Conservatives as runaway favorites to win the Dec. 12 election with a pledge to implement Brexit and halt 3-1/2 years of political uncertainty.

The pound was 0.36% higher against the U.S. dollar.

Reporting by Saqib Iqbal Ahmed; Editing by Dan Grebler