* Euro falls as concerns about low inflation resurface
* Yen pulls back as some risk appetite returns to market (Updates market action, adds quotes)
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 as global asset and fund managers rebalanced their portfolios.
The dollar index, which measures the greenback against a basket of six other major currencies, was up 0.38 percent at 89.364, 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 dollars,” 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.
The yen, often viewed as a safe-haven currency in times of market turbulence, slipped against the greenback, but recovered most of the lost ground as U.S. stocks fell late in the day. The dollar was up 0.08 percent at 105.48 yen, after earlier rising as high as 105.9 yen.
“Quarter ends are always a bit confusing for currency markets as the usual cross currents increase and USD/JPY is usually right in the middle of it,” Brad Bechtel, managing director FX at Jefferies, said in a note.
Bechtel warned that any strength due to such quarter-end flows can end as abruptly as it springs up.
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 0.34 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 bounced off the day’s lows but was on track to post its biggest daily loss against the greenback in nearly three weeks, as expectations of selling pressure from a large corporate healthcare deal prompted investors to take profits after a recent rally.
Reporting by Saqib Iqbal Ahmed Editing by Susan Thomas and Chizu Nomiyama