* Dollar mostly holds overnight gains
* Moves slight as markets in holding pattern, watching trade talks
* Aussie and kiwi perk up, move may be short-lived
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
By Tom Westbrook and Stanley White
SINGAPORE/TOKYO, Oct 8 (Reuters) - The dollar found support on Tuesday while investors awaited the outcome from crucial Sino-U.S. trade talks in Washington, with many staying cautious as neither side has shown signs of giving ground at the negotiations.
The Chinese yuan firmed in onshore and offshore trade as Chinese financial markets reopened after a week-long holiday.
The Australian and New Zealand dollars, whose fortunes are often linked with global trade, edged higher as some investors reduced bearish bets. Dealers warned this move could fade depending on the tone of the trade talks in Washington.
Hopes for a breakthrough are not high, but some investors are trying to scale back their positions, at least temporarily, because the outcome of the trade negotiations cannot be predicted.
“No-one can be confident about these talks, except our inclination has long been that the talks are more likely to disappoint than to please market expectations,” said Sean Callow, currency strategist at Westpac in Sydney.
“The U.S. and China are just too far apart on key issues,” he said, leaving only a very limited deal in prospect.
The dollar rose 0.14% to 107.18 yen, approaching a one-week high reached on Monday.
Against a basket of currencies, the dollar steadied at 98.959.
In the onshore market, the yuan traded at 7.1263 per dollar, stronger than its previous close of 7.1480 on Sept. 30. In the offshore market, the yuan gained around 0.1% to 7.1257 per dollar.
Deputy-level meetings between U.S. and Chinese trade negotiators began in Washington on Monday, with little immediate signs of progress.
Top-level talks are scheduled to begin on Thursday, when Chinese Vice Premier Liu He meets U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
The talks are getting under way about a week before a scheduled increase in U.S. tariffs on $250 billion worth of Chinese goods, to 30% from 25%.
U.S. President Donald Trump has said the tariff increase will take effect if no progress is made in the negotiations. The United States on Monday added 28 Chinese public security bureaus and companies to a trade blacklist.
Masaru Ishibashi, joint general manager of the trading department at Sumitomo Mitsui Banking Corp in Tokyo, said the dollar is benefiting from “waning pessimism about the U.S. economy”.
“In addition, speculators are trying to lighten their positions related to the trade war, which is helping some commodity currencies,” he said. “The next move depends entirely on what the trade talks produce.”
The Australian dollar rose 0.24% to $0.6748, while the New Zealand dollar advanced by 0.46% at $0.6318.
The antipodean currencies have generally been on a downtrend since early September as weaker-than-expected economic indicators pointed to a need for more policy easing by Australia and New Zealand.
However, both the Aussie and the kiwi have moved up from recent lows, which dealers say is partly because some investors squared off positions before the trade talks.
The euro held steady around $1.0975 as the single currency slowly gets some distance from a 2-1/2 year low hit last week.
Sterling last traded at $1.2296. The pound has been confined to a narrow range recently, but investors are growing increasingly concerned about a lack of progress between Britain and the European Union to agree a Brexit withdrawal deal. (Reporting by Tom Westbrook and Stanley White; Editing by Lincoln Feast and Richard Borsuk)