China's yuan slips after Trump-Xi call leaves issues unresolved

SHANGHAI, June 6 (Reuters) - China's yuan slipped against the dollar on Friday, as U.S. President Donald Trump and Chinese leader Xi Jinping held a much-anticipated call but left key issues that have stoked tensions between the world's two largest economies unresolved.

During the more than one-hour-long call, Xi told Trump to back down from trade measures that have roiled the global economy and warned him against threatening steps on Taiwan, according to a Chinese government summary.

"Although the likelihood of a U.S.-China deal increases with more high-level dialogues, investors remain skeptical that both sides are merely buying time to address some pressing issues," said Gary Ng, senior economist at Natixis.

Trump said on social media that the talks focused primarily on trade led to "a very positive conclusion," announcing further lower-level U.S.-China discussions and that "there should no longer be any questions respecting the complexity of Rare Earth products."

"The call does not offer much comfort in cutting tariffs, but only touching on access of critical materials and tech export control," Ng said. "Therefore, there is no certainty of what kind of deal will be made, and it may only be a partial one given the wide range of issues between the U.S. and China."

As of 0400 GMT, the onshore yuan CNY=CFXS was 0.04% lower at 7.1820 per dollar, while its offshore counterpart CNH=D3 was down about 0.06% to 7.1790 at midday.

"The talk itself should lift market sentiment, but Trump's erratic policies make it hard to convince investors," said a trader at a foreign bank.

Wang Zhuo, partner at Zhuozhu Investment in Shanghai, said "Trump's fickleness has made such talks less and less meaningful to the market", but added that direct communications were helpful for removing some misunderstandings.

Trade talks between Washington and Beijing had stalled after a meeting in Geneva last month, where both sides agreed to temporarily roll back most of the tariffs imposed on each other's goods since April. Trump has accused China of violating the bilateral deal.

Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.1845 per dollar, its strongest since May 26 and 90 pips firmer than a Reuters' estimate CNY=RTRS of 7.1935. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

Investors will shift their attention to a string of Chinese economic data releases next week, including inflation and trade data on Monday, as investors are keen to gauge the health of the broader economy under Trump's tariffs.

LEVELS AT 0400 GMT: