* U.S. 10-year, 30-year Treasury yields hit fresh multi-year highs
* Yen also strengthens vs euro on Italy worries
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Daniel Leussink
TOKYO, Oct 9 (Reuters) - The dollar dipped against the yen on Tuesday on simmering anxiety about higher U.S. bond yields, the Sino-U.S. trade war and political turmoil in Europe.
The yen extended gains against the greenback to a fourth straight session, coming off an 11-month low of 114.55 yen per dollar reached on Thursday last week.
“We have to pay close attention to the negative impact on stock markets of China’s economic outlook and long-term U.S. interest rates,” said Kumiko Ishikawa, senior analyst at Sony Financial Holdings.
In Tuesday’s trade, Asian shares wobbled around 17-month lows as China allowed its currency to slip past a psychological bulwark amid sharp losses in domestic share markets.
On the weekend, China’s central bank moved to inject more liquidity into the financial system as policy makers worried about the economic impact of a heated trade row with the United States.
Over the past trading days, rising U.S. long-term yields initially provided support to the dollar against the yen, but after that the mood on stock markets worsened, similar to what happened in February, Ishikawa said.
“Dollar/yen is being impacted more heavily by stock markets turning lower than the rising U.S. long-term yields, leading to a strengthening of the yen,” she said.
The dollar shed 0.2 percent to 113.05 yen on Tuesday.
Against a basket of its rivals, the greenback was steady at 95.774, not far off a seven-week top of 96.127 hit last week.
Yields on the benchmark 10-year Treasury paper rose to a seven-year high of 3.252 percent, before retreating to 3.244 percent, while yields on 30-year Treasurys brushed a four-year peak.
The euro edged up to $1.1496, trading close to a seven-week low of $1.1457 reached during the previous session amid discord between Italy and the European Union over Rome’s budget plans.
On Monday, the Italian 10-year bond yield jumped more than 20 basis points to 3.626 percent, the highest since February 2014, while the country’s stock market fell to its weakest since April 2017.
Italian Deputy Prime Minister Matteo Salvini, speaking at a media conference with French far-right leader Marine Le Pen on Monday, denounced European Commission President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici as enemies of Europe.
Against the Japanese currency, the euro lost 0.1 percent to 130.00 yen, slightly above a near-four-week low of 129.49 yen reached overnight.
The Australian dollar rose 0.2 percent to $0.7091.
The Chinese offshore yuan was slightly stronger on the day at 6.9160 yuan per dollar, trading not far off the key 7 level. It recovered somewhat after slipping about 0.35 percent overnight.
A senior U.S. Treasury official said on Monday the United States remains concerned about China’s recent currency depreciation.
“U.S. yields are rising, whereas the Chinese authorities are trying to push down the Chinese yield. That’s typically a stronger dollar/weaker renminbi situation,” Masafumi Yamamoto, chief currency strategist at Mizuho Securities, said.
“If the stimulus measures...by the Chinese authorities are regarded as positive for the Chinese economy, then it will support the renminbi,” he said. “But at the moment, that’s not the case.” (Editing by Shri Navaratnam)