*

Euro, sterling and Aussie dollar perk up

*

Investor sentiment recovers slightly with stocks higher

*

Safe-haven yen and Swiss franc also higher

(Updates in morning European trading)

By Harry Robertson and Ankur Banerjee

LONDON/SINGAPORE, April 8 (Reuters) - The U.S. dollar

fell on Tuesday while the euro rallied as stocks rebounded in

Asia and Europe on hopes that U.S. President Donald Trump will

enter negotiations over his sweeping tariffs that have roiled

markets for three days.

Rises in both the Japanese yen and Swiss franc showed

consistent appetite for safe-havens, however, as investors

remain concerned about the potential for a global recession.

Currencies have been highly volatile in recent days as

investors tried to work out which offer safety while markets

sell off, and which economies might be worst hit.

On Tuesday the euro was last up 0.3% at $1.0931,

down from an earlier rise of more than 0.7%, after falling for

the two previous days.

Currencies that often fare well when stock markets are

rising also recovered, with the pound up 0.2% and the

Australian dollar 1.1% higher after both dropped in the

previous two sessions.

"Sentiment is rebounding, perhaps on the view that Trump may

focus protectionism on China and speed up trade deals

elsewhere," said Francesco Pesole, currency strategist at ING.

"Markets may be erring on the optimistic side though."

Investors on Tuesday gleaned some positive signs from the

Trump administration about tariff talks. Treasury Secretary

Scott Bessent said on Monday he hoped negotiations would bring

levies down.

Trump said Japan was sending a team to start negotiations,

helping Japanese equities rally sharply overnight.

However, China dug in and criticised what is called

"blackmail" from the United States over Trump's threat of

additional 50% tariffs in response to China's initial

retaliation. Meanwhile the European Union floated 25%

counter-tariffs on U.S. goods.

The dollar was last down 0.4% against the Japanese yen

, traditionally seen as a safe-haven at times of market

stress, at 147.28 yen to the dollar. The U.S. currency touched a

six-month low against the yen on Friday.

Meanwhile the U.S. dollar index, which measures the

currency against six peers, was 0.3% lower at 103.11.

It has fallen around 0.7% since Trump announced the tariffs

on April 2, as investors have weighed up the hit to the U.S.

economy against the currency's typical role as a shield from

market slumps.

"The current volatility is entirely the result of the policy

choices of the Trump administration, meaning that, if reversed,

the impact on financial markets will likely reverse as well,"

said Nathan Lim, chief investment officer at Lonsec Investment

Solutions.

China's yuan fell to its weakest level since 2023

after the central bank slightly loosened its grip on the

currency in what analysts said was an attempt to counteract the

blow to exports from tariffs.

The move "has added to building speculation amongst market

participants that China could allow a bigger devaluation of the

renminbi to offset the negative impact (of) the worsening trade

war," said Lee Hardman, senior currency analyst at MUFG, using

an alternative name for the yuan.