* Trump trade policy uncertainty puts pressure on Chinese currency
* Dollar hits nearly 4-month highs against yen
* Markets still betting on Fed rate hike in December
By Yumna Mohamed
LONDON, Nov 10 (Reuters) - The Chinese yuan weakened past 6.80 per dollar in the offshore market on Thursday for the first time in more than six years on fears that U.S. president elect Donald Trump will act on the protectionist rhetoric that ran through his campaign.
The dollar steadied against most major peers as currency markets struggled for a clear narrative on the fallout of U.S. President-elect Donald Trump's economic policy, with Asian markets particularly concerned about the future of U.S. trade with China under the Republican's government.
Trump's shock victory over Hillary Clinton initially triggered a massive selloff in risk assets - sending the yen, euro and Swiss franc higher - before turning around in volatile trade, helped in part by Trump's acceptance speech which focused on unity and economic growth.
"For Asian currencies, the initial conclusions are somewhat negative, given the trade dependency of the region, if not on the US, then on China," HSBC strategist Paul Mackel said in a note.
The yuan weakened to 6.8158 against the dollar CNH= . Against the yen, the dollar hit a 3-1/2 month high of 105.95 yen JPY= .
The Australian dollar, hammered on Wednesday by concern over Trump's protectionist promises and their fallout for China and others, was back up over 1 percent against the greenback AUD=D4 . That was helped by better-than-expected after mortgage data but other analysts also pointed to the potential for a boost in U.S. infrastructure spending, which would drive more demand for the iron and other commodities Australia produces.
The dollar index, which tracks the greenback against a basket of six major rivals, was flat on the day at 98.540 .DXY after rising to an overnight high of 98.704, its highest since Oct. 28 in a stunning reversal from lows seen on the initial signs of Trump's triumph.
"Nobody really knows what he is going to do and we don't even have any idea what his advisors are thinking," currency strategist Lutz Karpowitz said.
"Markets are waiting to see if and how he will implement some of the stranger ideas he spoke about during his election campaign. But he will definitely implement some of those ideas which means that the current dollar strength won't be sustained."
Others see substantial reasons to expect more broad dollar strength next year. Trump has promised tax reform which may draw more U.S. corporate profits home and higher fiscal spending and growth is expected to spur inflation and dollar interest rates higher.
The yield on benchmark 10-year Treasury debt US10YT=RR fell back in Asian trading to 1.995 percent, compared to its U.S. close of 2.064 percent on Wednesday.
Prices fell on 10-year Treasury notes and 30-year bonds on Wednesday, pushing yields to their highest levels in 10 months. U/S
After a blip following the election result, investors have reverted to expecting the U.S. Federal Reserve to raise interest rates at next month's meeting, after a year on hold.