* Euro gets a lift from upbeat IFO survey
* Yen knocked off six-week highs vs dollar
* Dollar slips as yield appeal weakens
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh (Updates throughout)
By Sujata Rao
LONDON, March 25 (Reuters) - The euro rose on Monday after a better-than-expected business confidence survey from Germany eased some of the worries about economic growth and knocked the safe-haven yen off six-week highs to the dollar.
World markets were buffeted on Friday by fears of economic recession fanned by inversion of the U.S. bond yield curve. That sapped demand for higher-yield, growth-reliant assets and drove investors toward “safe” destinations such as the Japanese yen and gold.
However, sentiment took a turn for the better after Germany’s IFO Institute said its business climate index rose to 99.6 in March, from an upwardly revised 98.7 in the previous month. The March figure beat a consensus forecast for a reading of 98.5.
The data briefly lifted German 10-year yields back into positive territory, the single currency also benefited, rising 0.2 percent to a session-high of $1.13250, having traded flat earlier in the day.
Against the yen, the single currency traded as high as 124.81, up almost half a percent on the day before easing back to around 124.60, up 0.3 percent on the day.
The IFO provided some reassurance to the euro following dire PMI data on Friday that had sent the currency some 0.7 percent lower versus the dollar.
“At the end of last week, we had a situation where fear of global recession was extremely high, so the IFO is a good opportunity to take a bit of a reality check,” Commerzbank strategist Ulrich Leuchtmann said, noting a recession was unlikely in the near term in the euro zone or the United States.
“I wouldn’t say the dash for safe assets is over. The tone of general risk-off sentiment will prevail for a while but not to the same extent (as Friday).”
The earlier rush for safety had driven Japanese 10-year government bond yields to 31-month lows while the yen traded as high as 109.70 against the greenback, a six-week high. But it eased after the IFO to trade around 110.100 .
The dollar meanwhile retreated almost 0.2 percent against a basket of currencies to around 96.47. It enjoyed no benefit from news that U.S. Attorney General William Barr had said U.S. Special Counsel Robert Mueller found no evidence of collusion between Russia and President Donald Trump’s election campaign team.
The dollar, with the highest yields in the G10, has been favoured by investors for many months. Last week saw “long” positions on the dollar hit a 2019 high, according to calculations by Reuters and data from the Commodity Futures Trading Commission.
Goldman Sachs, however, told clients that it was advising staying short the dollar versus yen.
“The Fed’s pivot has lowered U.S. real rates across the curve. As a result, U.S. fixed income and equity markets may have become less attractive for Japanese investors,” they said.
The British pound recouped some early losses against the dollar and euro after ITV reported parliament could be asked to vote on Prime Minister Theresa May’s Brexit withdrawal agreement on Tuesday. (Reporting by Sujata Rao Editing by Mark Heinrich and Susan Fenton)