GLOBAL MARKETS-Asia shares fall on worries over inflation, Fed outlook

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Global asset performance http://tmsnrt.rs/2yaDPgn
* World FX rates http://tmsnrt.rs/2egbfVh

By Julie Zhu
HONG KONG, May 11 (Reuters) - Asian shares declined in early
trade on Tuesday as Wall Street retreated on worries about
accelerating inflation, prompting investors to cut back on their
exposure to growth-focused stocks on bets of higher interest
rates in the not-too-distant future. A host of Federal Reserve speakers this week will likely
give markets plenty to consider as policymakers assess how best
to respond to receding risks posed by the coronavirus in some
major economies.
A test case on U.S. inflation will come this week when the
Labor Department releases its latest consumer price index report
on Wednesday.
"Markets reversed course overnight as inflation fears drove
investors away from growth stocks, notably the tech stocks, to
pick cyclicals," said Hong Hao, head of research at BoCom
International.
"The Asian markets today will follow the U.S. trend and
several Chinese tech stocks will in particular be under big
pressure due to the pending antitrust penalty," he said.
In early trade, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS was down 1.7%, with Australian
stocks .AXJO off 1.2% and Tokyo's Nikkei .N225 2.63% lower.
China's blue-chip CSI300 index .CSI300 fell 0.77% in
morning trade, while Hong Kong's Hang Seng index .HSI opened
down 2%.
Overnight, Wall Street closed lower as inflation jitters
drove investors away from market-leading growth stocks in favor
of cyclicals, which stand to benefit most as the economy gathers
momentum.
The Dow Jones Industrial Average .DJI pulled back from
record highs hit earlier in the U.S. day. The S&P 500 .SPX
extended losses to 1%, and the tech-heavy Nasdaq Composite
.IXIC fell 2.55%. Speculation that growing price pressure would erode the
dollar's value kept the U.S. currency near a 2-1/2-month low. By
early Tuesday, the dollar index =USD , which measures the
greenback against six major currencies, had pared losses to
stand at 90.333.
A sluggish dollar helped sterling GBP=D3 rally to $1.412,
the highest since Feb. 25, despite Scotland's leader saying
another referendum on independence was inevitable after her
party's resounding election victory.
Rising inflation expectations lifted longer-dated U.S.
Treasury yields. The yield on benchmark 10-year Treasury notes
US10YT=RR rose to 1.5914% after plunging to a two-month low of
1.469% on Friday.
Treasuries and the dollar have swung back and forth as
investors adjust their expectations for when the U.S. Federal
Reserve will start tapering bond purchases and raising interest
rates as the U.S. economy gains momentum.
The two-year yield US2YT=RR , which rises with traders'
expectations of higher Fed fund rates, touched 0.1528% compared
with a U.S. close of 0.153%.
Oil prices gave up earlier gains as concerns that rising
COVID-19 cases in Asia will dampen demand outweighed
expectations that a major U.S. fuel pipeline could restart
within the week following a cyber attack. U.S. heating oil futures HOc1 , which reflects prices for
jet fuel and diesel, stood at 2.0074 a gallon.
U.S. crude CLc1 dipped 0.63% to $64.51 a barrel. Brent
crude LCOc1 fell to $67.83 per barrel.
Gold was slightly lower. Gold was slightly lower. Spot gold
XAU= was traded at $1834.36 per ounce. GOL/