GLOBAL MARKETS-Asia shares down on week as U.S.-China tensions rattle sentiment

* MSCI ex-Japan, Nikkei on course for weekly loss
* Signs of hawkish U.S. stance on China shake investor
confidence
* European stocks to play catch-up with U.S. recovery
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano
TOKYO, May 15 (Reuters) - Asian stocks edged up on Friday
but were on course to end the week lower as deteriorating
U.S.-China relations add to uncertainties over how fast
economies can recover as they start to emerge from lockdowns.
Worries about confrontations between the two largest
economies in the world eclipsed Chinese economic data, which
showed its economy is gradually recovering from the shock of the
coronavirus outbreak.
With China the first to relax lockdowns, global investors
are closely watching it for clues on how long demand will take
to bounce back, as other countries begin to ease their own
anti-virus measures.
European stocks are expected to play catch-up with the late
recovery in U.S. shares on Thursday, with pan-European Euro
Stoxx 50 futures STXEc1 up 1.21%.
U.S. S&P500 futures ESc1 dipped 0.2% after the index
gained 1.15% the previous day, recovering from a three-week low.
Japan's Nikkei .N225 rose 0.6% but finished the week down
0.7% while mainland Chinese shares .SSEC were mixed.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.2% but has lost about 1.0% so far this
week.
While many analysts regarded the weekly drop as a natural
correction after a rally since mid-March, they are increasingly
worried about rising U.S.-China tensions. U.S. President Donald
Trump blames China for its handling of the COVID-19 disease that
has killed more than 85,000 Americans.
Trump signalled a further deterioration of his relationship
with China by saying he has no interest in speaking to President
Xi Jinping right now. He went so far as to suggest he could even cut ties with the
world's second-largest economy, a day after the U.S. federal
pension fund delayed investment in Chinese shares in the wake of
pressure from the White House. The move fanned fears the confrontation between Washington
and Beijing could escalate beyond trade to finance and other
areas.
"The U.S.-China trade war was the biggest theme for markets
last year. It will be a big concern if the conflict escalates
beyond trade," said Takeo Kamai, head of execution at CLSA.
China's industrial output in April rose 3.9% from a year
earlier, exceeding expectations for a 1.5% rise and expanding
for the first time this year as its economy slowly emerges from
its coronavirus lockdown. But retail sales remained weak as unemployment rose.
"On the whole, the Chinese economy is improving and the
industrial output figures suggest GDP could be positive in
April-June," said Wang Shenshen, senior strategist at Mizuho
Securities. "But concerns about the U.S.-China relations are
weighing on markets."
In the currency market, the dollar steadied near a
three-week high as Sino-U.S. tensions and worries about a second
wave of coronavirus infections rattled investors.
In Asia, major currencies were little changed with the euro
changing hands at $1.0806 EUR= and the yen at 107.19 per
dollar JPY= .
Oil prices extended gains as data showed demand for crude
picking up in China after the easing of curbs to stem the
coronavirus outbreak, boosting hopes that the global supply
overhang may start to fade. O/R
U.S. crude futures traded 2.1% higher at $28.42 per barrel.

(Editing by Kim Coghill and Jacqueline Wong)