* Dollar index hits two-week highs as Trump tone calms markets
* 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 dollar jumped to its highest level in two weeks and continued to reverse brief initial losses from the surprise election of businessman Donald Trump as U.S. president, as markets awaited more clarity on his economic policy.
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.
While markets still struggle for a clear narrative on what a Trump presidency means for global growth, his concilliatory tone boosted market expectations that the Federal Reserve will hike interest rates in December and supported dollar strength.
"The dollar is taking back ground, particularly against the euro, since yesterday's election as market uncertainty was calmed by Trump's more presidential tone in his victory speech," Caxton FX analyst Alexandra Russell-Oliver said.
The euro earlier hit a two-week low of $1.0890, near its lowest against the greenback since Oct. 28 EUR=D4 , currently sitting at $1.0900.
The dollar is now trading up a third of a percent on the day against a basket of currencies at 98.841 .DXY , breaking past 106 Japanese yen - a 4-month high - for the first time since July JPY= .
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, particularly regarding trade with China. The yuan weakened to 6.8225 against the dollar CNH= .
"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 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.
"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
(Editing by Andrew Heavens)