GLOBAL MARKETS-Asia stocks bounce from 3-1/2-mth lows as trade fears soften

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* MSCI Asia-Pacific index up 0.5%, Nikkei sheds 0.1%
* Stocks up as U.S. President Trump softens trade rhetoric
* China industrial output, retail sales fall short of
forecasts
* Oil surge stalls on bigger-than-expected U.S. inventory
build

By Shinichi Saoshiro
TOKYO, May 15 (Reuters) - Asian stocks bounced from a
3-1/2-month low on Wednesday as a slight softening in rhetoric
from U.S. President Donald Trump helped ease worries about the
U.S.-China tariff war and on expectations Beijing could release
more economic stimulus.
Shares in Asia were led by strong gains in Chinese equities,
which rebounded after two days of losses.
"Chinese stocks are mounting a rebound as they had been
oversold in recent sessions. Sentiment is also better as
President Trump seems to be desiring a compromise," said Kota
Hirayama, senior emerging markets economist at SMBC Nikko
Securities in Tokyo.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 0.5%. The index had fallen to its lowest
level since the end of January the previous day as the Sino-U.S.
trade conflict intensified. Beijing on Monday imposed a tariff
hike on U.S. goods following Washington's decision last week to
hike its levies on Chinese imports.
However, Trump on Tuesday said he had a "very good" dialogue
with China and insisted talks between the world's two largest
economies had not collapsed. Wall Street shares were able to
bounce overnight in wake of Trump's comments. .N
The Shanghai Composite Index .SSEC advanced 1%, shrugging
off concerns about economic growth following
weaker-than-expected Chinese data released on Wednesday.
Growth in China's industrial output slowed in April from a
4-1/2 year high in March, while the increase in retail sales
missed forecasts. "The latest data shows that the Chinese economy still needs
stimulus. Its stock markets could sustain its recovery if the
government indicates it will continue to keep supporting the
economy," Hirayama at SMBC Nikko Securities said.
Australian stocks .AXJO added 0.6%, South Korea's KOSPI
.KS11 gained 0.7% and Japan's Nikkei .N225 dipped 0.1%.
The Chinese yuan was a shade firmer at 6.9005 per dollar in
offshore trade CNH=D4 , having edged away from a five-month
trough of 6.9200 set on Tuesday.
The dollar was steady at 109.615 yen JPY= , having pulled
away from a three-month low of 109.020 plumbed on Monday when
trade war worries boosted investor demand for the safe-haven
Japanese currency.
The euro was unchanged at $1.1204 EUR= . The common
currency had dipped nearly 0.2% the previous day after Italy's
deputy prime minister said the country is ready to break
European Union budget rules on debt levels if necessary to spur
employment. The dollar index against a basket of six major currencies
was nearly flat at 97.530 .DXY after gaining 0.2% the previous
day.
In commodities, U.S. crude futures were down 0.55% at $61.44
per barrel CLc1 after the American Petroleum Institute (API)
reported a bigger-than-expected build in crude oil inventory.
O/R
U.S. crude inventories rose by 8.6 million barrels in the
week to May 10 to 477.8 million, compared with analysts'
expectations for a decrease of 800,000 barrels. Brent crude LCOc1 lost 0.18% to $71.11 per barrel.
Brent and U.S. crude futures had surged the previous day
after top exporter Saudi Arabia said explosive-laden drones
launched by a Yemeni-armed movement aligned to Iran had attacked
facilities belonging to state oil company Aramco.

(Editing by Shri Navaratnam and Sam Holmes)