* Investors ignore trade tension for now
* Dollar rises, sterling off 4-month low vs euro
* Yen weakens against dollar as investors buy riskier assets
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh (Recasts with yuan, dollar, updates figures)
By Tom Finn
LONDON, July 10 (Reuters) - The Chinese yuan rebounded and the dollar strengthened broadly on Monday as investors bought riskier assets, encouraged by signs that trade tensions have yet to hurt economic momentum.
As the second quarter corporate earnings season begins, investors appear to be ignoring the deepening conflict between the United States and China over trade.
Instead the focus is on decent economic data including favourable U.S. jobs figures and a healthy rise in German exports which have pushed the dollar and the euro higher.
A broad appetite for risk in currency markets on Tuesday saw the dollar rise 0.3 percent against the Japanese yen, a currency usually bought during times of political uncertainty, to 111.08 yen, approaching a six-month high.
Elsewhere, the British pound rebounded on Tuesday as fears faded about a challenge to Prime Minister Theresa May’s leadership after the departures of two senior ministers.
Sterling turned positive and rose to $1.3301 before edging down to $1.3245 after data showed weaker-than-expected industrial and manufacturing growth in May.
On Monday, the British currency slid to $1.3189 after May’s foreign minister and Brexit negotiator quit in protest at her plans to keep close trade ties with the European Union.
Conservative lawmakers say May is probably safe from a leadership challenge but the departures have undermined the prime minister’s own proclamation of cabinet unity.
“The market is worried that yesterday’s resignations could be a sign of major instability within the British government. However, we see little indication of that... sterling should correct its losses,” said Commerzbank FX analyst Esther Maria Reichelt.
Markets still expect the Bank of England to raise interest rates at its next policy meeting on Aug. 2, but analysts warn that any full-blown political crisis could dent those expectations.
The pound strengthened against the euro to 88.60 pence, and at 0900 GMT was up 0.2 percent, after hitting a four-month low of 89.025 pence per euro on Monday.
Elsewhere currency markets were broadly risk-positive as investors appeared to shrug off concerns about the U.S.-China trade tensions.
The dollar’s index against a basket of six major currencies was up 0.3 percent at 94.308 after falling on Monday to 93.711 , its lowest since mid-June.
That halted a rally by the euro which fell 0.3 percent to $1.1721 and was heading for its biggest daily decline versus the dollar in over a week.
The yuan rose 0.3 percent in offshore markets to 6.6404 against the dollar, further away from the lows hit in June in its biggest ever monthly fall.
“It seems the market has digested the potential negative outcome stemming from the U.S.-China trade war, although I am not sure the market has really priced in the worst scenario,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
The yuan gained last week on the back of a stronger midpoint fixing and after data showed China’s foreign exchange reserves rising in June.
Turkey’s lira on Tuesday made up some of the previous day’s losses, trading 0.1 percent higher at $4.6890. The currency had gone as low as $4.7506 after President Tayyip Erdogan named his son-in-law as Treasury and Finance minister on Monday in the new cabinet. (Additional reporting by Hideyuki Sano and Daniel Leussink Editing by Andrew Heavens and David Stamp)