* Euro falls as concerns about low inflation resurface
* Yen pulls back as some risk appetite returns to market (Updates throughout on U.S. market open, changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, March 27 (Reuters) - The dollar rose against a basket of major currencies on Tuesday, rebounding from a five-week low hit earlier in the session, as trade tensions receded and the greenback found support from month-end flows.
The dollar index, which measures the greenback against a basket of six other major currencies, was up 0.41 percent at 89.395, after slipping to a five-week low of 88.942.
“Overall the dollar is seeing a bit of a rebound. A lot of that is due to month–end flows that tend to be supportive of the dollar,” said Sireen Harajli, currency strategist at Mizuho in New York.
“Investors like to square out their positions that they take during the month by repatriating some of those back into dollar,” she said.
Concerns regarding a trade war appear to have abated a little overnight and that too was helping the greenback, Harajli said.
Global markets were shaken this month after U.S. President Donald Trump moved to impose tariffs on Chinese goods and Beijing threatened similar measures. But fears of a trade war eased on hopes that the United States and China would begin negotiations.
Wall Street’s main indexes rose on Tuesday, extending their sharp rally from the previous session and the yen, often viewed as a safe-haven currency in times of market turbulence and economic uncertainty, slipped against the greenback.
After a big gain on Monday, the euro had added another 0.3 percent to hit $1.2476 in early European trading, less than a cent off the three-year highs it hit in mid-February, helped by receding worries about a trade war.
But the common currency slipped 0.35 percent against the greenback after data showing that lending to euro zone companies slowed last month, and comments by European Central Bank Governing Council member Erkki Liikanen that underlying euro zone inflation may remain lower than expected even if growth is robust.
“Should markets anticipate a reduction in the synchronicity of global growth, it would also support near-term USD strength,” Hans Redeker, global head of currency strategy at Morgan Stanley, said in a note.
Sterling fell against the dollar, the Swiss franc and the euro as expectations of selling pressure from a large corporate healthcare deal prompted investors to take profits after a recent rally.
Quarterly flows as global asset and fund managers rebalance their portfolios, a move that can distort markets, could have also played a role in the pound’s decline, strategist said.
The British pound was down 0.56 percent against the dollar.
Reporting by Saqib Iqbal Ahmed Editing by Susan Thomas