FOREX-Dollar, yen slip as global tensions ease, pound rallies

    * Hong Kong, Italy, Britain news helps risk appetite
    * Euro lifted away from 28-month lows, Lagarde comments help
    * Sterling jumps as UK lower house moves to block no-deal
    * Graphic: World FX rates in 2019

 (Updates market action, adds quote)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 4 (Reuters) - The safe-haven dollar and yen
fell on Wednesday after global political worries eased with what
markets perceived as positive news in Hong Kong, Italy and
    Sterling rallied above $1.22 on Wednesday for the first time
since Aug. 30 as investors grew more optimistic after British
lawmakers took another step in an attempt to block a no-deal
    The dollar index slid for a second straight session, while
the yen, which draws safe-haven bids in times of geopolitical
stress, dropped for the first time in four days against the
    Risk appetite rose on news that Hong Kong leader Carrie Lam
was withdrawing an extradition bill that triggered months of
often violent protests.
    Edward Moya, senior market analyst at OANDA in New York,
said the dollar's weakness was triggered by this "risk-on move
in Hong Kong that gave Hong Kong equities one of the best moves
in a few years." That has boosted appetite for riskier
currencies that have generally higher yields, he added.
    "Everyone has been waiting for this major dollar reversal
for quite some time," Moya said. "This is providing a little bit
of unwinding of some dollar bullish positions."
    In Italy, Prime Minister Giuseppe Conte unveiled a new
cabinet that united the anti-establishment 5-Star Movement and
the centre-left Democratic Party, an unlikely coalition that is
expected to improve ties with the European Union.
    In late U.S. trading, the dollar was last down 0.57% against
a basket of major currencies, at 98.438.
    The yen fell against the dollar, which rose 0.38% to 106.36
yen. It also declined against the euro, which gained
0.89% to 117.32 yen.
    The euro also rose 0.52% versus the dollar to $1.10295
 after comments from Christine Lagarde, who will likely
be the European Central Bank's next president, introduced some
doubt over the scale of an ECB stimulus package expected next
    Lagarde said highly accommodative monetary policy for a
prolonged period was necessary but she added that the bank
needed to be mindful of the negative side-effects of such tools.

    Expectations for an interest rate cut, the relaunch of asset
purchases and other ECB measures to stimulate the economy have
weighed on the euro. On Tuesday, it hit a 28-month low around
    Meanwhile, sterling jumped 1.15% to $1.2226, and
against the euro it rallied 0.65% to 90.22 pence.
    The lower house of the British parliament voted on Wednesday
to prevent Prime Minister Boris Johnson taking Britain out of
the EU without a deal, but he proposed a snap election on Oct.
15, just weeks before Brexit, to free his hands.
    Currency bid prices at 4:19PM (2019 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1027        $1.0972     +0.50%         -3.85%      +1.1037     +1.0969
 Dollar/Yen       JPY=        106.3300       105.9200    +0.39%         -3.56%      +106.4300   +105.8400
 Euro/Yen         EURJPY=     117.29         116.24      +0.90%         -7.07%      +117.4000   +116.1400
 Dollar/Swiss     CHF=        0.9807         0.9866      -0.60%         -0.07%      +0.9883     +0.9799
 Sterling/Dollar  GBP=        1.2224         1.2084      +1.16%         -4.18%      +1.2229     +1.2079
 Dollar/Canadian  CAD=        1.3225         1.3332      -0.80%         -3.02%      +1.3344     +1.3218
 Australian/Doll  AUD=        0.6795         0.6757      +0.56%         -3.60%      +0.6800     +0.6756
 Euro/Swiss       EURCHF=     1.0816         1.0828      -0.11%         -3.89%      +1.0860     +1.0812
 Euro/Sterling    EURGBP=     0.9021         0.9078      -0.63%         +0.41%      +0.9085     +0.9018
 NZ               NZD=        0.6359         0.6334      +0.39%         -5.33%      +0.6364     +0.6327
 Dollar/Norway    NOK=        9.0300         9.1004      -0.77%         +4.53%      +9.1066     +9.0279
 Euro/Norway      EURNOK=     9.9598         9.9889      -0.29%         +0.54%      +9.9935     +9.9605
 Dollar/Sweden    SEK=        9.7380         9.8197      -0.33%         +8.64%      +9.8253     +9.7280
 Euro/Sweden      EURSEK=     10.7410        10.7771     -0.33%         +4.65%      +10.7771    +10.7320

 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tommy Wilkes in London, Richard Leong in New York
Editing by Paul Simao and Sonya Hepinstall)