* Small weekly rise would be dollar’s best since May
* Euro stable ahead of EU Summit
* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E
By Julien Ponthus
LONDON, June 19 (Reuters) - Mounting geopolitical tensions and fears that a second wave of COVID-19 cases could stymie a swift economic recovery set the dollar on track for its best weekly gain in a month on Friday.
The world’s reserve currency, which was flat in European morning trade, has gained about 0.3% this week against a basket of currencies, its best performance since mid-May.
Tensions remain high between China and India despite the two Asian nuclear powers agreeing to make efforts to de-escalate their confrontation in the western Himalayas.
U.S. President Donald Trump, meanwhile, renewed his threat to cut ties with China, a day after the first high-level talks between the countries in months.
Adding to nervousness, Australian Prime Minister Scott Morrison said that a “sophisticated state-based actor” has been attempting to hack a wide range of Australian organisations for months and had stepped up its efforts recently.
The Australian dollar, which has soared by almost 25% from March lows, was up 0.3% at $0.6875.
Traders were switching their attention to a European Union summit at which bloc leaders will try to navigate regional divisions over a 750 billion euro ($840.8 billion) coronavirus recovery fund.
The euro was flat $1.1207, having lost about 1% against the dollar since Tuesday on doubts over whether the plan can be realised.
Markets have also been focused on an uptick in coronavirus cases in many U.S. states this week and new infections detected in Beijing, raising fears of a return to global lockdowns.
“Even if we do not see a ‘second wave’, a renewed rise in infection numbers illustrates that things are not going to return to normal for a long time,” Commerzbank analysts said in their morning note.
Elsewhere, the British pound was flat at $1.2433 after data showed that British retail sales rebounded more strongly than expected last month and that public borrowing hit a record high as debt exceeded economic output.
Trade talks with the EU were also in the spotlight.
French Junior European Affairs Minister Amelie de Montchalin on Friday said that she could not rule out Brexit talks ending without a deal, adding that it remains in Britain’s interests to reach an agreement. ($1 = 0.8921 euros)
Reporting by Julien Ponthus and Tom Westbrook Editing by David Goodman