GLOBAL MARKETS-Asian shares follow Europe higher on EU relief, auto merger

* MSCI Asia ex-Japan +0.07%
* Falling bond yields point to continued risk aversion
-analyst
* Brent crude drops below $70 per barrel after rally
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Andrew Galbraith
SHANGHAI, May 28 (Reuters) - Asian shares tracked European
gains on Tuesday, as relief over EU election results eased
concerns about political difficulties in the bloc and merger
news supported auto shares, although persistent concerns about
trade capped regional sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.07% in early trade, and U.S. S&P 500
e-mini futures ESc1 rose 0.14% to 2,835.75.
Australian shares .AXJO were up 0.51%, while Japan's
Nikkei stock index .N225 gained 0.41%.
Those small gains followed a relatively light session in
Europe on Monday, with financial markets the U.K. and U.S.
closed for holidays.
European auto shares had rallied after Italian-American
carmaker Fiat Chrysler FCHA.MI confirmed it had made a
"transformative merger" proposal to French peer Renault
RENA.PA in a deal which would create the world's third-biggest
carmaker. That sector rally spilled into Asia with Mitsubishi
Motors Corp 7211.T in Japan adding 3.17% and Nissan Motor Co
7201.T gaining 2.11%.
​ Provisional results from EU elections also buoyed markets
after pro-union parties kept a firm grip on power in elections
to the European Parliament. The pan-European STOXX 600 .STOXX
added 0.22%. "Although Eurosceptic and antiestablishment parties didn't
win as many seats as expected, their influence has increased
significantly. This could have implications for the political
colour of key EU positions," said Rodrigo Catril, senior FX
strategist at National Australia Bank.
"The Parliament composition is also likely to have
implications on the priority agenda for future EU reform,
particularly with respect to things like immigration, fiscal
spending and fiscal union," he added, noting a decrease in bond
yields pointed to continued risk aversion.
Benchmark 10-year German Bunds DE10YT=RR hit a low of
-0.147% on Monday, their lowest level since September 2016.
On Tuesday, U.S. yields were also lower. Benchmark 10-year
Treasury notes US10YT=RR yielded 2.3132%. The two-year yield
US2YT=RR touched 2.1766%.
Trade concerns also remain high on investors' list of
concerns. U.S. President Donald Trump said on Monday that
Washington was not ready to make a deal with Beijing but he
expected one in the future, while at the same time pressing
Japanese Prime Minister Shinzo Abe to even out a trade imbalance
with the United States.
The dollar was up 0.05% against the yen at 109.55 JPY= ,
and fell 0.04% against the euro, with the common currency buying
$1.1192.
The dollar index .DXY , which tracks the greenback against
a basket of six major rivals, 0.14% higher at 97.754.
In commodity markets, oil prices wavered after gaining more
than 1% on Monday on tensions in the Middle East and OPEC-led
supply cuts, as well as continuing Russian supply disruptions
after a contamination problem discovered last month.
Brent crude LCOc1 dipped back below the $70 mark, falling
0.26% to $69.93 per barrel, but U.S. West Texas Intermediate
crude CLc1 remained higher, adding 0.72% to $59.05 per barrel.
Spot gold XAU= was flat at $1,284.80 per ounce. GOL/
Bitcoin BTC=BTSP , which on Monday had touched $8,939.18,
its highest level in more than a year, retreated 0.14%
to$8,758.48. The cryptocurrency topped $8,000 for the first time
since July 2018 on May 13.