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FOREX-Dollar steadies as angst over Trump's stimulus stance fades

* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

* Euro recoups some losses

* Asian stock rise, U.S. futures rise

* Fed speakers to comment on economy later in day

LONDON, Oct 7 (Reuters) - The dollar steadied on Wednesday, down against most currencies, after an initial jump triggered by U.S. President Donald Trump’s cancelling stimulus talks with Democrat lawmakers, increasing demand for safe-haven assets.

Trump’s surprise decision to call off stimulus talks until after the Nov. 3 presidential election initiated a selling spree on Wall Street as investors braced for more downside risks in an already shaky U.S. economy.

The initial shock eased when Trump later asked Congress to extend $25 billion in new payroll assistance to U.S. passenger airlines.

U.S. treasury yields fell on Trump’s stimulus message, then crept back up to just below 1.59%, where they stood before the announcement.

Yields have been rising and the curve steepening since August on expectation that a Joe Biden presidency would mean a bigger stimulus, inflationary expectations and a supply of bonds.

Sentiment improved overnight in Asia, where markets hit a two-week high and U.S. stock futures made their way back into positive territory a few hours before the open in New York. Stocks in Europe were mostly flat to negative.

At midday in Europe, the dollar index was down 0.1% at 93.729. The euro rose 0.26% to $1.1763 per euro, up 0.25%.

“The market has largely reversed the spike in volatility and the dollar rally we saw yesterday evening”, said Kit Juckes, head of FX strategy at Societe Generale. “A delay to further fiscal easing until after the election doesn’t scare the markets when Q3 GDP looks so strong.”

Wednesday’s batch of economic data was not encouraging for the eurozone. German industrial output edged down in August after three months of gains, suggesting the recovery in Europe’s largest economy from the coronavirus shock is starting to lose steam.

Some analysts, however, are not giving up on a gradual recovery.

“Despite this generally rather sobering report, we remain confident that the recovery of German industry will continue slowly but surely”, said Martin Moryson, chief economist at asset manager DWS, noting “the rather confident mood in industry”.

The British pound, which made morning gains against the dollar, fell by 0.1% to $1.2855 after Ireland’s foreign minister warned that fishing rights remained a big obstacle to a trade deal between Britain and the European Union.

Japan’s yen, which had not moved much on the U.S. stimulus news, lost some ground against the dollar, which moved about 0.4% higher at 106.07.

Highlighting the potential danger of no additional stimulus funds to prop up the economy, Federal Reserve Chair Jerome Powell on Tuesday warned that the U.S. economy could slip into a downward spiral if the coronavirus is not effectively controlled and called for more economic assistance.

Traders will look to minutes from the Fed’s most recent meeting and comments from several Fed speakers later Wednesday for further signs of how central bankers view the outlook. (Reporting by Julien Ponthus; editing by Toby Chopra, Larry King)

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