LONDON, Aug 18 Reuters The dollar hovered around a twomonth high on Friday, set for a fifth consecutive week of gains in the longest winning streak for 15 months, buoyed by demand for safer assets on worries over China39;s economy and bets U.S. interest rates will stay high.

The People39;s Bank of China PBOC set a muchstrongerthanexpected daily fixing, lifting the yuan from a 9month low hit on Thursday, while sterling fell after British retail sales weakened more than expected in July.

The yuan fell 0.13 against the dollar to 7.3098 in offshore trading , bouncing back from Thursday39;s ninemonth lows, after the PBOC set the official midpoint at 7.2006, more than 1,000 pips stronger than Reuters39; estimate.

China39;s economic troubles have deepened, with property developer China Evergrande seeking Chapter 15 protection in a U.S. bankruptcy court, and concerns also growing over default risks in its shadow banking sector.

China39;s securities regulator unveiled a package of measures aimed at reviving a sinking stock market, but investors said they would do little to boost confidence if the economy remains sluggish.

Beijing has so far disappointed with stimulus, while the PBOC cut rates earlier this week in a surprise move that widened the yield gap against the U.S., rendering the yuan even more vulnerable to decline.

Developments in the distressed Chinese financial and property sector are emerging as the most prominent driver for market sentiment, said Francesco…