* FX markets still broadly long dollars
* Sterling tanks on Brexit talk concerns, PMI data
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Sept 3 (Reuters) - The dollar consolidated near a one-week high against a basket of rivals on Monday as tensions around global trade negotiations fuelled demand for the greenback, though concerns about capital flows checked gains.
U.S. President Donald Trump said on Saturday there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with the trade talks or he would terminate the trilateral pact altogether tensions are broadly supporting the dollar, but the market is hardly very conducive of risk," said Viraj Patel, an FX strategist at ING in London.
Traders bought the dollar against the British pound GBP=D3 and the Canadian dollar CAD=D3 . The dollar's status as the chief reserve currency makes the U.S. currency the primary beneficiary of concern over trade conflicts.
But gains were limited as analysts pointed out the quality of capital inflows into U.S. assets has worsened noticeably in recent weeks, suggesting the dollar's rise may be short-lived.
"The quality of longer-term sticky flows into the dollar has started to weaken noticeably and we believe the dollar's gains may be coming to a close," said Hans Redeker, global head of foreign exchange strategy at Morgan Stanley (NYSE:MS) based in London.
The dollar .DXY edged up to 95.22, nearing its highest level since Aug. 27 against a basket of its rivals. It has gained nearly 7 percent since mid-April when trade tensions first arose.
On a positioning basis, markets remained firmly in the stronger dollar camp with net outstanding positions holding near their highest levels since January, 2017.
But gains were muted - safe-haven currencies such as the Swiss franc CHF=EBS and the Japanese yen JPY=EBS were supported against higher-yielding rivals.
The euro EUR=EBS weakened 0.1 percent against the dollar after euro zone manufacturing growth slowed to a near two-year low in August as optimism dwindled amid growing fears of an escalating global trade war, a survey showed. was the standout loser of the day as new concerns about Brexit negotiations and weak UK manufacturing survey data combined to push the British currency down 0.6 percent.
Michel Barnier, the European Union's chief Brexit negotiator, said he is "strongly opposed" to the British government's proposals on future trade ties after it leaves the EU pound GBP=D3 fell 0.4 percent to $1.29 and weakened 0.3 percent against the euro EURGBP=D3 to 89.80 pence.
Risk appetite in foreign exchange markets recovered with the euro gaining 0.2 percent on the day against the Swiss franc EURCHF=EBS and the Australian dollar AUD=D3 up by a quarter of a percent.
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