* Pro-EU parties fragmented, but cling to majority in election
* Euro off 2-year low, sterling edge up
* Yen slips, Trump sees Japan trade deal after July elections
* Graphic: World FX rates in 2019
By Hideyuki Sano
TOKYO, May 27 (Reuters) - The euro held firm in early Monday trade
after pro-European Union parties withstood more fragmentation than
before to hold on to two-thirds of seats in the EU parliament
elections, limiting gains in nationalist opponents.
The common currency traded at $1.1211 in Asian trade, near its
highest levels in 1 1/2 weeks, and off a two-year low of $1.11055
touched on Thursday.
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.
"It looks like pro-EU parties still have a majority. To be
sure, we see a rise of anti-EU parties in some countries but it is not
like they are winning an outright majority," said Minori Uchida,
chief currency analyst at MUFG Bank.
"I'd expect markets' focus to shift back to U.S.-China
relations," he said.
Trading was seen subdued on Monday due to market holidays in
London and New York, limiting moves in other currency pairs.
The U.S. currency traded at 109.45 yen , up 0.15%, underpinned
by Japanese players' bargain-hunting.
Buying interest from Japanese investors is strong when the dollar
dips near 109 yen, said Mitsuo Imaizumi, chief currency strategist at
"Data shows Japanese investors bought a large amount of
foreign bonds a few weeks ago when the dollar fell near 109 yen.
There's demand from Japanese companies that need dollar for their
M&A deals," he said.
Still, the U.S. currency is 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 and technology.
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 ticked up 0.15% to $1.2731 , 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)
((email@example.com; +81 3 6441 1827; Reuters