GLOBAL MARKETS-Asia stocks unsettled by yields and oil, Nikkei hit by BOJ shift

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asia shares mostly weaker after Wall St skid
* BOJ move to buy only TOPIX ETFs hits Nikkei
* US 10-yr yields at 1.71%, near 14-month high
* Oil prices flat after huge overnight fall

By Wayne Cole
SYDNEY, March 19 (Reuters) - Asian share markets slipped on
Friday after a spike in global bond yields soured sentiment
toward richly priced tech stocks, while a stampede out of
crowded positions may have put an end to the bull run in crude
oil.
Having plunged 7% overnight, Brent crude futures LCOc1
managed a feeble bounce of just 11 cents to $63.39 a barrel,
while U.S. crude CLc1 added 6 cents to $60.06. O/R
The retreat wiped out four weeks of gains in a single
session amid worries world demand would fall short of high
expectations.
Markets were also unsettled by the Bank of Japan's (BOJ)
decision to slightly widen the target band for 10-year yields
and tweak its buying of assets.
The bank portrayed the changes as a "nimble" way to make
easing more sustainable, though investors seemed to take it as a
step back from all-out stimulus.
A decision to confine purchases to only TOPIX-linked ETFs
knocked the Nikkei .N225 down 1.6%, while South Korea .KS11
lost 1%. MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS followed with a fall of 1.5%.
Chinese blue chips .CSI300 shed 1.9%, perhaps unnerved by
a fiery exchange between Chinese and U.S. diplomats at the first
in-person talks of the Biden era. Nasdaq futures NQc1 went flat, after a sharp 3% drop
overnight, while S&P 500 futures ESc1 added 0.1%. European
futures followed the overnight fall with the EUROSTOXX 50
STXEc1 off 0.8% and FTSE futures FFIc1 0.6%.
Investors are still reflecting on the U.S. Federal Reserve's
pledge to keep rates near zero out to 2024 even as it lifted
forecasts for economic growth and inflation.
Fed Chair Jerome Powell seems likely to drive home the
dovish message next week with no less than three appearances
lined up. "Stronger growth and higher inflation but no rate hikes is a
potent cocktail for risk assets and equity markets," said Nomura
economist Andrew Ticehurst.
"The message for bonds is more mixed: while the anchoring of
the short end is a positive, market participants may come to
worry that the forecast rise in inflation might not be temporary
and that the Fed risks 'overcooking it'."
Yields on U.S. 10-year notes spiked to the highest since
early 2020 at 1.754% US10TY=TWEB and were last at 1.71%. If
sustained, this would be the seventh straight week of increases
worth a huge 64 basis points in total.
The drastic bearish steepening of the yield curve reflects
the risk the Fed is serious about keeping short-term rates low
until inflation accelerates, so requiring longer-term bonds to
offer fatter returns to compensate.
The latest BofA survey of investors showed that rising
inflation and the bond "taper tantrum" had replaced COVID-19 as
their number one risk.
While still very bullish on economic growth, company
earnings and stocks, respondents feared a sharp setback for
equities should 10-year yields cross 2%.
The jump in Treasury yields provided some support to the
U.S. dollar, though analysts fret that faster U.S. economic
growth will also widen the current account deficit to levels
that will ultimately drag on the currency.
For now, the dollar index had bounced to 91.853 =USD , from
a low of 91.30 to leave it slightly firmer for the week.
It steadied on the low-yielding yen at 108.91 JPY= , just
off the recent 10-month top of 109.36. The euro eased back to
$1.1914 EUR= , having repeatedly failed to crack resistance at
$1.1990/1.2000.
The rise in yields has weighed on gold, which offers no
fixed return, and left it down 0.2% at $1,731 an ounce XAU= .

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