* Dollar under pressure as risk-sensitive currencies gain
* Trump said to have asked to prepare trade deal draft
* Ebb in trade woes weighs on yen, lifts Aussie and yuan
* Traders awaits U.S. jobs data for potential lift
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Tom Finn
LONDON, Nov 2 (Reuters) - The dollar fell on Friday on signs U.S. President Donald Trump is seeking to resolve a damaging trade war with China.
The conflict between the world’s two largest economies has cast a pall over the global economy and boosted safe-haven demand for the greenback this year.
But the dollar sank to a seven-day low on Friday after Bloomberg reported that Trump had asked U.S. officials to begin drafting a possible trade deal with Beijing.
Currencies hit hard by recent dollar buying including the euro, the Norwegian and Swedish crowns and Australian and New Zealand dollars climbed higher.
Analysts said the start of November had seen a flood of end-of-month buying of dollars cease and a more positive mood for risk-taking pervade markets after a brutal month for stocks.
“Either Trump is paving the way for a trade deal later this month, or he’s cynically driving up equity indices ahead of U.S. mid-term elections,” said Kit Juckes, a strategist at Societe Generale.
“What’s for sure, is that talk of a trade deal has added further juice to the last few day’s risk appetite, weakening the dollar.”
The dollar index, which measures the greenback’s value versus six major peers, moved lower by 0.2 percent to 96.101 after dropping nearly 0.9 percent overnight.
The Australian dollar, which is sensitive to Chinese economic developments, rose half a percent to $0.72500.
The Aussie had jumped 1.8 percent on Thursday on increasing confidence U.S.-China ties were improving.
Both the euro and the British pound rose 0.3 percent against the dollar.
The pound jumped on Thursday after the Bank of England kept interest rates steady and hinted at slightly faster future rate rises if Brexit goes smoothly.
Market participants were awaiting the U.S. jobs report due at 1230 GMT for clues on the pace of further interest rate rises in the United States.
“The relatively cheap dollar, might attract buyers if the overall jobs report is robust,” said David Madden, a strategist at CMC Markets.
U.S. payroll figures are expected to have risen 190,000 in October, from a 134,000 increase in the previous month.
With investor risk sentiment improving, emerging market currencies made gains versus the dollar.
China’s yuan rose about 0.2 percent to a three-week high of 6.8970 in offshore trade after gaining 0.8 percent on Thursday.
Worries about Chinese economic growth and the trade row had pushed the offshore yuan to a 22-month trough of 6.9800 midweek.
Despite the dollar’s slide, some analysts were cautious about further falls given the headwinds for the global economy.
“With the combination of ongoing overhang of trade wars, the tightening Fed and the U.S. economy outperforming its G10 peers, we don’t expect such across-the-board EM FX rallies vs USD to be long-lasting,” ING analysts said in a note to clients. (Reporting by Tom Finn Editing by Alexander Smith)