* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Markets rattled by escalation in U.S.-China trade war

* Yen, Swiss franc and gold rise on risk aversion

* Traders braced for spike in volatility (Adds onshore yuan, updates prices)

By Stanley White

TOKYO, Aug 26 (Reuters) - China's yuan hit an 11-year low in onshore trade and tumbled to a record low in offshore trade after a sharp re-escalation in the U.S.-China trade war whacked investor confidence and darkened the global economic outlook.

The yen, often bought in times of uncertainty as a safe haven, pared early gains versus the dollar due to Japanese importers' selling, but remained firmer against other currencies in a sign of waning risk appetites.

Gold prices leapt higher and benchmark Treasury yields hit their lowest since July 2016 as investors fled to safer assets.

Financial markets could be in for a rough ride in the near future if investors continue to shift money from stocks to less risky assets, such as debt, gold and safe-haven currencies.

"China's economy is slowing, so the yuan will only fall further unless authorities take steps to stop it," said Takuya Kanda, general manager of the research department at Gaitame.com Research Institute in Tokyo.

"Some dollar buying from Japanese importers pulled dollar/yen off its lows, but excluding such real demand there's no reason to buy the dollar. The yen will continue to rise."

In China's onshore market, the yuan fell to 7.1500 per dollar, the lowest since February 2008. In the offshore market, the yuan slid to 7.1850 yuan, the weakest since international trading in the currency began in 2010.

Spot gold rose 1.2% to $1,548.93 per ounce, approaching the highest since April 2013.

U.S. stocks tumbled on Friday when President Donald Trump announced an additional 5% duty on $550 billion in targeted Chinese goods, hours after Beijing unveiled retaliatory tariffs on $75 billion worth of U.S. products.

At the G7 meeting in France over the weekend, Trump caused some confusion by indicating he may have had second thoughts on the tariffs.

The White House on Sunday clarified these comments, saying Trump wished he had raised tariffs on Chinese goods even higher last week, even as he signalled he did not plan to follow through with his demand that U.S. close Chinese operations.

In Asian trading, the benchmark 10-year U.S. Treasury yield fell below 1.475% to reach their lowest in more than three years. Yields on 2-year debt fell to 1.465%.

Earlier this month the yield curve inverted for the first time in more than a decade when long-term yields traded below short-term yields, which is commonly considered a signal of an economic recession. Investors will watch to see if the yield curve inverts again.