By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar fell against the Japanese yen on Tuesday, as worries about flagging global growth and concerns about continuing U.S.-Chinese trade tensions drove investors to seek out safe-haven assets.

The dollar was 0.41 percent lower against the yen <JPY=>, which tends to benefit during geopolitical or financial stress as Japan is the world’s biggest creditor nation.

The greenback fell against the yen after the International Monetary Fund on Monday trimmed its global growth forecasts for 2019 and 2020. The IMF said a failure to resolve trade disputes could further destabilize a slowing global economy.

A report that the United States had rejected China’s offer for preparatory trade talks put further pressure on the dollar.

The Trump administration turned down an offer by two Chinese vice-ministers to travel to the United States this week for preparatory trade talks because of a lack of progress on two important issues, the Financial Times reported on Tuesday, citing people briefed on the talks.

“The IMF’s forecast contributed to the global growth concerns, the report about the U.S.-China negotiations perhaps contributing to less optimism surrounding the talks and then you have the ongoing U.S. (government) shutdown, which is not helpful for sentiment either,” said Eric Viloria, FX strategist at Credit Agricole in New York.

“All three of these factors are contributing to the general risk-off tone that you are seeing,” said Viloria.

In another sign of risk aversion, the Australian dollar <AUD=>, often used as a liquid proxy for China investments, eased 0.45 percent to $0.7126.

China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest level in nearly three decades. Growing signs of weakness in China are fueling anxiety about risks to the world economy.

Data showing U.S. home sales tumbled to their lowest level in three years in December and house price increases slowed sharply, suggesting a further loss of momentum in the housing market, also weighed on the dollar.

The euro was steady near a three-week low as morale among German investors improved slightly in January, but their assessment of the economy’s current condition deteriorated to a four-year low, a survey showed on Tuesday, sending mixed signals for the growth outlook of Europe’s largest economy.

Sterling rose after strong employment data suggested Britain’s labor market remained robust despite an economic slowdown ahead of Brexit. The pound was up 0.6 percent at $1.2967.

(Reporting by Saqib Iqbal Ahmed; Editing by Steve Orlofsky and Chizu Nomiyama)