* North Korea says open to resolving issues with U.S.
* Dollar/yen bounces back also ahead of U.S. long weekend
* Euro gains capped by worries about Italian politics
* Turkish lira weakens again
* “Two lira” issues linger, may help safe-haven currencies further
By Tomo Uetake
TOKYO, May 25 (Reuters) - The yen stepped back from a two-week high against the dollar on Friday when North Korea said it was open to resolving issues with the United States after President Donald Trump called off a June summit with its leader, Kim Jong Un.
Although the yen and the safe-haven Swiss franc had gained on Thursday in response to heightened worries over global politics, traders were quick to lock in gains ahead of a long weekend in the United States and Britain.
“The risk-off mood eased a bit after North Korea said it’s open to talks during early Asian trade,” said Shuntaro Ikeshima, chief manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking Corp.
The yen fell 0.3 percent to 109.59 yen in Asian trade following conciliatory comments from North Korean Vice Foreign Minister Kim Kye Gwan.
It had hit a two-week high of 108.955 per dollar overnight in a knee-jerk reaction after President Donald Trump called off the planned summit with Kim.
Trump blamed the cancellation on what he said was Pyongyang’s “open hostility,” and warned that the U.S. military was ready in the event of any reckless acts by North Korea.
The dollar index, which measures the greenback against a basket of six other currencies, was up 0.2 percent at 93.912 and not far from the five-month high it hit on Wednesday.
The dollar had been rising for weeks on its widening yield advantage but lost some of its momentum after minutes of the Federal Reserve’s last policy meeting published on Wednesday were seen as more dovish than markets had expected.
The euro edged down 0.1 percent to $1.1710, and was on track for a sixth consecutive week of falling against the dollar, hobbled by worries over a deepening economic slowdown in the currency bloc.
Six straight weeks of losses would be its longest such streak since January 2015.
Also weighing on the euro was the insistence of the far-right League, a partner in Italy’s planned coalition government, that eurosceptic economist Paolo Savona be appointed economy minister.
“I think the risk-off vibes will likely persist as ‘two lira’ issues also linger,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management, refering to the Turkey, whose lira is sinking, and Italy, whose new eurosceptic government may want to re-introduce lira.
Turkey’s lira weakened 0.9 percent, retreating further from hefty gains made on Wednesday when the central bank raised interest rates 300 basis points. (Reporting By Tomo Uetake Editing by Eric Meijer and Kim Coghill)