Low euro supports EU wheat with eyes on Ukraine peace talks

PARIS/HAMBURG, Feb 18 (Reuters) - European wheat rose on Tuesday, supported by a fall of the euro against the dollar, but prospects of stronger competition from Ukrainian and Russian grains if an uncertain peace deal was to be found between the two countries was keeping a lid on prices.

The most traded May contract BL2K5 on Euronext's Paris-based milling wheat futures was up 1.4% by 1640 GMT at 241.00 euros a metric ton.

By the same time, most-traded wheat Wv1 on the Chicago Board of Trade was up 1.25% at $6.07-1/2 a bushel.

"I think there is attention on the Ukrainian peace talks today in Saudi Arabia which seem to have made a positive start," one German trader said.

"This would open up the prospects of a return to normal, and much larger, wheat export shipments from both Ukraine and Russia unfortunately in competition to the EU," he added.

The dollar advanced against major currencies on Tuesday, with losses led by the euro, garnering safe-haven bids amid tariff concerns and peace negotiations on the Russia-Ukraine conflict that are fraught with tension.

"If peace is achieved, this creates the possibility Ukraine's exports could flow again from any port. Russia would be able to get cheaper shipping insurance and all the shipping it wants. Russia's government could then be under less pressure to restrict wheat exports to keep domestic inflation down."

Dealers were still uncertain about any damage from severe winter weather in some EU regions and the impact on grains from any trade war between the U.S. and the EU.

Low EU exports were also weighing on sentiment despite slowing Russian shipments.

"Euronext prices will have to fall to attract new export sales, but at least Russian exports are slowing down and the weaker euro could be a short-term help," he said.