* Pro-EU parties fragmented, but cling to majority in election
* Euro off 2-year low, sterling little moved
* Yen flat, Trump sees Japan trade deal after July elections
* Graphic: World FX rates in 2019
By Hideyuki Sano
TOKYO, May 27 (Reuters) - The euro barely budged in early Monday
trade after pro-European Union parties held on to two-thirds of seats
in the EU parliament elections, limiting gains in nationalist opponents.
The common currency was little changed at $1.1210 in Asian
trade and off a two-year low of $1.11055 touched on Thursday, as the
markets studied the outcome of the vote.
While centre-right and centre-left blocs are losing their shared
majority, surges in the Greens and liberals meant parties committed to
strengthening the union held on to two-thirds of seats, official
The results dented the hopes of anti-immigration, anti-Brussels
National Rally led by Marine Le Pen, Italian Deputy Prime Minister
Matteo Salvini and others who have been opposing attempts to forge
closer EU integration.
"The focus is on how each government will react and how the
Brexit negotiations will play out after this elections. So far we've
seen limited market reaction as far-right, populist parties didn't do
as well as some had feared," said Shin Kadota, senior FX and
rates strategist at Barclays.
Trading was seen subdued on Monday due to market holidays in
London and New York.
The dollar was little changed against other currencies.
The U.S. currency traded at 109.35 yen , not far from a
three-month low of 109.02 touched two weeks ago, hit amid worries
about escalating tensions between Washington and Beijing over trade
The dollar has been also capped against the yen as U.S. President
Donald Trump is seen putting pressure on Japan to take measures to
reduce its trade surplus with the United States.
Trump, who arrived in Tokyo on Saturday, tweeted on Sunday that
much of the trade negotiation with Japan will wait until after the
country's election in July.
The British pound was steady at $1.2725 , having regained some
ground after Prime Minister Theresa May set out a departure date,
bouncing back from a 4-1/2-month low of $1.2605 set on Thursday.
But the prospect of a "no deal" Brexit was fast becoming
the central battle of the race among contenders to succeed May, with
four of eight leadership hopefuls having said Britain must leave the
EU on Oct. 31 even if this means a no-deal Brexit.
(Editing by Shri Navaratnam)
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