* Dollar rises broadly

* U.S. 10-year, 30-year Treasury yields hit multi-year highs

* Yen strengthens vs euro on Italy worries

* Yuan falls despite China easing bank reserve requirement

* Graphic: World FX rates in 2018 (Adds details, quotes, updates prices)

By Tom Finn

LONDON, Oct 9 (Reuters) – The euro fell to a seven-week low
on Tuesday as the dollar rose broadly and concerns persisted
about a row in the European Union over Italy’s budget.

The euro has tended not to budge in response to spikes in
Italian bond yields triggered by developments in the dispute,
with investors judging that Rome’s spending plans will not
impact the monetary policy of the European Central Bank.

But the threat of a showdown along with weakness in stock
markets worldwide has seen traders who had bet on a fourth
quarter euro rebound ditch the single currency.

The euro fell 0.4 percent to $1.1444, its lowest
since Aug. 20.

"Concerns over Italy have largely remained contained,
dampening downside risks for the euro in the near-term, but it
may not remain that way if Italian risks continue to escalate,"
said analysts at MUFG.

The dollar strengthened across the board helped by U.S.
Treasury yields resuming their steep climb to seven-year highs.
Only Japan’s yen outperformed the dollar among the major

Against a basket of its rivals , the greenback rose
0.3 percent to 96.081, not far off a seven-week top of 96.127
hit last week.

Italian Economy Minister Giovanni Tria struck a resolute
tone on his controversial budget plans in Rome’s parliament and
that saw Italy’s benchmark 10-year government bond yield move
towards a 4-1/2-year high. "In light of current levels of stress in the Italian
markets, the question now is how far the Bund/BTP yield gaps can
blow out and how this could translate back into the FX market,"
said Simon Derrick, chief currency strategist at BNY Mellon.

Italy’s Deputy Prime Minister on Monday denounced European
Commission President Jean-Claude Juncker and Economics
Commissioner Pierre Moscovici as enemies of Europe.

Derrick said increasingly it was the dollar rather than the
Swiss franc that was benefiting from safe-haven trades in
response to the concerns over Italy.

Against the Swiss franc , the euro gained 0.2
percent to 1.1376 .

The Chinese offshore yuan was slightly weaker on
the day at 6.9350 yuan per dollar. It recovered somewhat after
slipping about 0.35 percent overnight.

At the weekend, China’s central bank moved to inject more
liquidity into the financial system as policymakers worried
about the economic impact of a heated trade row with the United
States. "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.

(Additional reporting by Daniel Leussink in Tokyo; editing by
John Stonestreet and Ed Osmond)


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