By Yadarisa Shabong and Brigid Riley
(Reuters) -The yen weakened on Friday after union wage talks in Japan concluded and the pound edged lower as UK economic growth faltered, with investors also processing trade tensions and slowdown concerns.
The Japanese currency, which scaled a five-month peak earlier this week at 146.545 per dollar on safe-haven bids and market bets for further rate hikes in Japan, lost some ground to trade as weak as 149.02 a dollar on Friday.
The dollar was last up 0.7% at 148.955 yen.
Japanese companies agreed to raise wages by 5.46% this year, topping both last year's preliminary and final figures and is likely to mark the highest pay hike in 34 years.
"The Rengo figures ... are still short of the more than 6% figure that the union had been aiming for, which might have resulted in some JPY longs deciding to square up their positions," said Michael Brown, senior research strategist at Pepperstone.
Rengo, the country's largest union umbrella, had sought an average hike of 6.09% this year.
The data is one important input into the Bank of Japan's decision making. Economists and markets see the central bank standing pat at its meeting next week as policymakers gauge global risks.
Another underperformer on Friday was the British pound after the UK economy unexpectedly contracted by 0.1% in January. Sterling was last down 0.17% at $1.29295.
But still, the British currency was not far off its four-month peak of $1.2990 hit on Wednesday.
PAUSE FOR BREATH
The dollar had started off the week poorly against major peers but has since bounced back and was on course to end with some weekly gains.
The dollar index last rose 0.13% to 103.96, on track for a third straight days of gains, though concerns simmered about the outlook for the U.S. and broader global economy.
"(I) would liken the greenback's recent rebound more to a pause for breath, than a particular sign that the dollar is about to make a significant resurgence," Pepperstone's Brown said.
Sowing more volatility across markets, U.S. President Donald Trump threatened to hit imports of wine, cognac and other alcohol from Europe with a 200% tariff.
The escalating tensions between the traditional allies came after the EU announced plans to impose levies on American whiskey and other products next month, itself a response to U.S. tariffs on steel and aluminium imports.
The euro steadied at $1.0852 after sliding further off Tuesday's five-month peak the previous day as the EU-U.S. trade spat rattled markets and Germany struggled to pass a massive spending proposal.