* U.S. escalates trade conflict with new tariff plan
* Yuan falls to more than 14-month low, Aussie pressured
* Sterling down after BoE warns on rate hikes, Brexit risks (New throughout, updates rates, comments to U.S. market open; changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Aug 2 (Reuters) - The dollar rose against a basket of currencies on Thursday, as a flare-up in trade tensions between the United States and China drove traders to buy the U.S. currency.
The dollar index, which measures the greenback against a basket of six other currencies, was up 0.32 percent at 94.931.
“Overall, the dollar is stronger today, and most of it seems to be coming on the back of increased trade tensions,” said Charles Tomes, senior investment analyst and trader at Manulife Asset Management in Boston.
U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports, his administration said on Wednesday.
U.S. Trade Representative Robert Lighthizer said Trump directed the increase from a previously proposed 10 percent duty because China has refused to meet U.S. demands and has imposed retaliatory tariffs on U.S. goods.
China on Thursday urged the United States to “calm down” and return to reason.
The yen, which tends to rise during periods of geopolitical or financial stress, strengthened on Thursday. The dollar was 0.24 percent lower against the yen, while the euro was down 0.58 percent against the Japanese currency.
“The risk-off tone is holding,” said Tomes.
China’s offshore yuan, which has been under pressure on worries the months-long trade dispute will hurt its economy, slid another half percent to as low as 6.868 yuan to the U.S, dollar, its weakest since May 2017.
The Australian dollar, seen as a proxy for Chinese growth because of Australia’s export-reliant economy, also sold off, slipping 0.31 percent against its U.S. counterpart.
The U.S. currency was further bolstered by an upbeat assessment from the U.S. Federal Reserve on Wednesday. The Fed kept interest rates unchanged but characterized the economy as strong, continuing the central bank on track to increase borrowing costs in September.
Meanwhile, the pound fell even as the Bank of England lifted interest rates from crisis-era lows, after Governor Mark Carney said monetary policy needed to “walk not run” and expressed concern about the risks of a cliff-edge Brexit.
Sterling has lost almost 10 percent of its value since hitting a post Brexit-referendum high in April, amid worries that Britain will fail to secure a trade deal before it exits the European Union in March. On Thursday, the pound was 0.61 percent lower at $1.3044.
The South Africa’s rand weakened against the U.S. dollar amid concerns about the government’s plans to amend the constitution to allow for the expropriation of land without compensation.
Reporting by Saqib Iqbal Ahmed; Editing by Steve Orlofsky