* New Zealand central bank cuts interest rates to 1.5 pct
* Kiwi dollar brushes 6-mth low after central bank decision
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
By Daniel Leussink
TOKYO, May 8 (Reuters) - Growing fears about the impact of a worsening U.S.-Sino trade conflict on global growth lifted the safe-haven Japanese yen to a six-week high against the dollar on Wednesday.
Elsewhere in the markets, the New Zealand dollar hit its weakest in half a year after the country’s central bank cut interest rates to record lows and projected a chance of even lower rates in the future.
But the broader market’s focus is on for trade talks on Thursday and Friday in Washington, where Chinese Vice Premier Liu will try to salvage a deal that would avoid a sharp increase in tariffs on Chinese goods ordered by U.S. President Donald Trump.
The prospects of an escalation rather than a resolution of the U.S.-China tariff war has seen the yen draw steady support from a flight-to-safety bid in recent days.
Otherwise, moves in currency markets have been relatively orderly compared with those in equity markets.
On Wednesday, the dollar index against a basket of six key rivals was last down 0.2 percent at 97.463, wiping out the previous session’s gain of a tenth of a percent.
Against the yen, the dollar slipped 0.3 percent to 109.92 yen for its fourth-day of losses against the Japanese currency and briefly touched a six-week low of 109.905 yen.
Hopes for an imminent trade deal sank on Sunday, when U.S. President Donald Trump said he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent by the end of the week and would “soon” target the remaining Chinese imports with tariffs.
Some investors suspected Trump’s threat was a negotiating tactic.
Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch, said traders had been long dollar/yen until last week to profit from the trade’s decent carry in the low volatility environment.
“This year, after the January 3 (flash) crash, the equity market has been strong (and) volatility has been low, and that’s why the dollar/yen has been supported,” said Yamada.
“The question is whether that will come back, or we’re heading into a different environment, which is (one of) vulnerable equity and higher volatility,” he said.
Since last Friday, the dollar has lost about 1.6 percent against the yen, which tends to benefit during geopolitical or financial stress as Japan is the world’s biggest creditor nation.
Kumiko Ishikawa, senior analyst at Sony Financial Holdings, said traders’ focus is now on whether the yen will strengthen past 109.70 yen per dollar, a recent high that was last hit in late March.
“A lot of focus is on whether dollar/yen will break through this level. If it breaks through it, I think there are a lot of traders who’re looking to jump in to sell,” said Ishikawa.
She added she believed the yen would break through that level if Trump followed through on his threat to increase tariffs on $200 billion worth of Chinese products this week, and vented impatience over negotiations with China.
Against other major currencies, the dollar kept largely to well-trodden ranges.
The kiwi dollar was the major exception in Asia after the Reserve Bank of New Zealand (RBNZ) cut benchmark cash rates to 1.5 percent from 1.75 percent.
The New Zealand dollar was last off 0.4 percent, recovering somewhat after falling to $0.6525, its lowest since last November.
The RBNZ’s governor said on Wednesday that uncertainties to its interest rate projections were “large”, and added that the U.S.-China trade war and growing trade barriers were one of the bank’s major concerns for New Zealand’s economy.
The Australian dollar rose 0.1 percent to $0.7019.
The euro was also up a tenth of a percent, at $1.1203 .
The European Commission said on Tuesday that euro zone would rebound next year from a slow-down in 2019 and unemployment would fall further, but inflation was likely to stay at this year’s levels and below the European Central Bank’s target.
The pound, meanwhile, extended losses to a third day after edging down a tad to $1.3070. (Editing by Simon Cameron-Moore)