GLOBAL MARKETS-Asian shares defensive, set for monthly loss on bond rout

(Recasts lead, add analyst comment, updates levels throughout)
* MSCI Asia ex-Japan on backfoot as yields stay high
* Index on track for its first monthly loss since October
2020
* U.S. dollar hovers near one-year highs against Japanese
yen
* Oil ticks higher, gold edges down

By Swati Pandey
SYDNEY, March 31 (Reuters) - Asian stocks were on the
backfoot on Wednesday while the safe-haven dollar held near a
one-year high as Treasury yields resumed their upward march,
hitting sentiment even as Chinese data underpinned signs of a
solid global economic recovery.
MSCI's broadest index of Asia-Pacific shares outside of
Japan .MIAPJ0000PUS eased from a one-week high of 682.36
points to be last at 680.04 and still a fair distance away from
an all-time peak of 745.89 touched just last month.
For the month so far, the index is down 1.6% to be on track
for its first loss in five months. It is poised for its fourth
consecutive quarterly gain though it would be the smallest
increase since a 21% fall in March 2020 when the coronavirus
pandemic brought the world to a standstill.
"Markets are watching closely to gauge the damage and
potential ripple effects caused by the Archegos Capital
Management crisis," ANZ analysts wrote in a note.
Some global banks are facing billions of dollars in losses
after U.S. investment firm Archegos Capital Management LP
defaulted on margin calls, putting investors on edge about who
else might be exposed. "For some this serves as a timely reminder that while
pandemic risks are abating, financial market risks remain
elevated," ANZ added.
The risk-off mood lately has been set off by a surge in bond
yields. U.S. Treasury yields skyrocketed 83 basis points just
this quarter, the biggest increase in over a decade, making
equity valuations look lofty particularly for major tech
companies which have borne the brunt of the sell-off.
On Wednesday, 10-year Treasury yields US10YT=TWEB rose as
high as 1.742% from Tuesday's 1.708%.
Analysts at Blackrock said they still liked tech stocks.
"Tech is a diverse sector and the driver of higher yields
matters more than the rise itself," Blackrock said in a note to
clients.
"Our new nominal theme implies central banks will be slower
to raise rates to curb inflation than in the past, supporting
our pro-risk stance and preference for tech."
Over a 6-12 month period, Blackrock is "overweight" equities
and "underweight" U.S. Treasuries, expecting a nominal increase
in yields.
"The 'term premium tantrum' mostly reflects investors
requiring higher compensation for the now greater risks to
portfolios presented by government bonds and inflation, in our
view," Blackrock said.
"This makes equities even more appealing than bonds in a
multi-asset context – and suggests any further sell-offs in tech
may present opportunities."
Sentiment in Asia remained downbeat despite data showing
China's factory activity expanded at a faster-than-expected pace
in March while the country's services sector surged too.
Chinese shares started in the red and deepened their losses,
with the blue-chip index .CSI300 off 1.1%. Hong Kong's Hang
Seng index .HSI slipped 0.2%.
Japan's Nikkei .N225 slid 0.7% as the country's industrial
output fell in February due to declines in the production of
cars and electrical machinery.
Australia's benchmark index .AXJO bucked the trend to be
up 1.5%, New Zealand rose 0.8% while South Korea's KOSPI index
.KS11 added 0.1%.
E-mini futures for the S&P 500 ESc1 were a shade higher.
In foreign exchange markets, currencies were mostly a sea of
red against the U.S. dollar which hit a one-year high of 110.48
against the yen as investors bet that massive fiscal stimulus
and aggressive vaccinations will boost the U.S. economic
recovery. FRX/ JPY=
The dollar is on track for a third straight monthly rise
against the yen and its biggest since end-2016.
The dollar index =USD held above 93 after surging as high
as 93.357 on Tuesday. It has climbed from close to 90 at the
start of March, on course for its best month since 2016.
Australia's dollar AUD= edged up to $0.7606, consolidating
after its drop to $0.7564 last week, the lowest level seen this
year.
In commodities, Brent crude LCOc1 rose 6 cents to $64.20 a
barrel while U.S. crude CLc1 added 27 cents to $60.81 barrel.
Gold prices slipped a touch to 1,679.31 an ounce.

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Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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