* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh (New throughout)
By Kate Duguid
NEW YORK, Aug 14 (Reuters) - The Japanese yen and U.S. dollar index were higher on Wednesday after the U.S. Treasury bond yield curve inverted for the first time since 2007 and investors, gripped by fear of a looming global recession, fled to the safety of perceived safe-haven assets.
An inversion of the yield curve - when the spread between 2- and 10-year Treasury yields falls below zero - is an indicator of coming recession. The chill the inverted curve sent through global markets was compounded by weak data from China and Germany and waning optimism about progress reported in U.S.-China trade talks on Tuesday.
The yen, already stronger on the day, was boosted by the inversion and was last trading up 0.74% at 105.93, though still off a 1-1/2-year high - excepting a flash crash in January - hit on Monday.
"There is plenty of doom and gloom to spread across the globe," said John Doyle, vice president for dealing and trading at Tempus Inc in Washington. The U.S. yield curve "is a major recession indicator. Germany, Italy and the UK are likely headed for a recession. Today's Chinese data was shockingly bad."
China's industrial output rose in July at the slowest pace in more than 17 years, official data showed on Wednesday, the latest sign that trade pressure has hit demand in the world's second-largest economy. Elsewhere, slumping exports sent Germany's economy into reverse in the second quarter.
On Tuesday, the dollar jumped versus the yen after U.S. President Donald Trump backed off his Sept. 1 deadline for imposing 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods.
Those gains were reversed overnight, however, as skepticism about the progress began to weigh.
"I thought yesterday's risk-on move was going to be short-lived, which looks to be right," Doyle said. "Reopening talks with China is a good step, but there has not been any real progress in months, so I think markets are starting to discount efforts by the U.S. or China to de-escalate because recent history has shown that little comes from it."
The dollar index, a measure of the dollar against a basket of currencies, was 0.17% higher in mid-afternoon trade at 97.978. While an inverted yield curve may have raised fears about the U.S. economy, fundamentals in other G10 countries look worse, boosting the dollar's appeal.
China's offshore yuan gave up some of its earlier gains on Wednesday as the weaker-than-expected economic data tempered optimism generated by the U.S. decision to delay tariffs.
Reporting by Kate Duguid in New York and Olga Cotaga in London; Editing by Jonathan Oatis and Will Dunham