* Risk appetite picks up; markets monitor coronavirus
* Offshore yuan, Australian dollar rise
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh (Updates prices, adds comments, news on Chinese monetary policy)
By Yoruk Bahceli
LONDON, Feb 4 (Reuters) - The Australian dollar and offshore Chinese yuan climbed on Tuesday as risk appetite picked up, although the spread of a novel coronavirus in China remained a threat.
The Australian dollar rose as much as 0.5% to $0.6725 , pulling away from a 10 1/2-year low of $0.6670 touched last October, after the Reserve Bank of Australia left its main cash rate unchanged at 0.75%. Paring back some gains, it was last up 0.3% at $0.67140.
The offshore yuan, which gained as much as 0.4% to 6.879 per dollar and above a one-month low of 7.0230 per dollar in earlier trade, also pared back gains, and was last up 0.2% at $6.9972.
Chinese stocks ended Tuesday's session higher as the central bank vowed to stabilise the market, after a rout linked to the coronavirus outbreak erased almost $400 billion off the market value of Shanghai's benchmark index on Monday.
The death toll in China from the outbreak rose by a record 64 from the previous day to 425, mostly in Hubei, the province where the virus is thought to have originated. The number of cases in China rose by 3,235 to 20,438.
"The speed at which these new infections are increasing is slowing down, which is something that at least shows we are in a situation where this is... not something like a global catastrophic event," said Commerzbank FX strategist Ulrich Leuchtmann.
"It's a very early stage to assess how far this will go. Therefore certainly there is a lot of disagreement in the market at the moment on how to interpret these numbers" he added.
Safe-haven currencies, such as the Japanese yen and Swiss franc, were down 0.2%-0.3% on the day.
Other trade-exposed currencies also rose, with the Norwegian crown up 0.6% at $9.2325.
"The big question is, how long this improvement in risk appetite might last ... unless we see a definite peak in the number of cases being diagnosed, it's really quite possible that risk appetite will falter again," said Jane Foley, senior FX strategist at Rabobank.
With risks to growth mounting, China's central bank is likely to lower its key lending rate - the loan prime rate (LPR) - on Feb. 20, and cut banks' reserve requirement ratios (RRRs) in the coming weeks, sources involved in the internal policy discussion told Reuters.
"This I find very interesting, because what we saw over the last 1.5 years was that the PBOC [People's Bank of China] was not very aggressive when it came to addressing cylical economic factors," said Commerzbank's Leuchtmann.
Elsewhere, Britain's pound rebounded from a near-six week low against the U.S. dollar that it hit in earlier London trade. It was last up 0.1% at $1.3012. Sterling has been under pressure from worries over a hard Brexit amid a tough stance here taken by Prime Minister Boris Johnson on European Union trade talks.
In the United States, Democratic Party officials blamed "inconsistencies" for an indefinite delay in Iowa's caucus results. A victory by left-leaning Bernie Sanders or Elizabeth Warren could hurt shares and boost safe-haven currencies.
The dollar index rose to 97.872 after gaining 0.44% on Monday, its the biggest advance this year.
Reporting by Yoruk Bahceli; additional reporting by Hideyuki Sano in Tokyo; Editing by Bernadette Baum