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* Yen steps back from 2 1/2-month low vs dollar
* Norwegian crown falls to record low vs dollar
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
By Elizabeth Howcroft
LONDON, Oct 16 (Reuters) - The dollar held near a four-week low on Wednesday as trade tension between Washington and Beijing continued to weigh on the global growth outlook.
The dollar's losses were most pronounced against the Japanese yen, which had reached a two-and-a-half-month low amid concern the trade war between China and the United States will weigh on risk appetite.
"The retreat in USD/JPY is obviously a function of the markets being a little nervous vis-à-vis any Chinese retaliation to the measures passed (in the U.S.)," said Jeremy Stretch, head of G10 foreign exchange strategy at CIBC Capital Markets.
The yuan fell after Beijing criticised new U.S. legislation backing pro-democracy protests in Hong Kong.
Reports of a "Phase 1" trade deal between the United States and China last week initially cheered markets. Lack of details on the agreement has since curbed any enthusiasm. "Markets are still cautiously optimistic that any unwind of the trade negotiations is not going to be a material one," he added.
Escalating trade tariffs from China and the United States over the past year have forced central banks to cut interest rates as global growth expectations weaken.
On Tuesday, the International Monetary Fund said it expected the global economy to grow 3.0% in 2019, its slowest pace since the 2008-09 financial crisis.
"The cost of taking this dispute to its next stage of escalation has exponentially increased," Morgan Stanley strategists said in a daily note, although they added the United States and China might adopt a more nuanced approach to the trade dispute in the coming days.
Elsewhere, the Norwegian crown weakened to its lowest since July 2001 at 9.1925 per dollar and its weakest against the euro since December 2008.
Norway is a major exporter of oil, making it particularly sensitive to economic tensions. The central bank has said this week it expects to keep interest rates on hold.
Trade-oriented currencies such as the Australian dollar and the New Zealand dollar also weakened. The kiwi dollar last traded down -0.5% at 0.6261.
Against an index of six other currencies, the dollar was weaker at 98.27 and just above an intraday low of 98.16 reached in Asian trading, its lowest in nearly four weeks. (Reporting by Elizabeth Howcroft; additional reporting by Stanley White in Tokyo, Saikat Chatterjee; editing by Larry King)