GLOBAL MARKETS-Asian stocks set to follow Wall St rally but China worries grow

* Hang Seng futures up 1.2%; Nikkei futures up 0.1%
* E-mini futures for S&P 500 up 0.1%
* Australia's S&P/ASX 200 index up 0.5%
* Nasdaq surges after confirming correction
* U.S. Treasury yields fall

By Matt Scuffham
NEW YORK, March 9 (Reuters) - Asian stocks were set to track
U.S. gains on Wednesday, as falling bond yields eased concerns
about surging inflation, although focus will shift to Chinese
markets amid worries about policy tightening in the world's
second-largest economy.
Australia's S&P/ASX 200 index .AXJO rose 0.47% in early
trading. Japan's Nikkei 225 futures NKc1 added 0.07%, Hong
Kong's Hang Seng index futures .HIS HSIc1 rose 1.17%.
E-mini futures for the S&P 500 EScv1 rose 0.10%.
"It's looking like a pretty positive open by virtue of Wall
Street's solid lead," said IG Markets analyst Kyle Rodda. "The
real interest will be when China's cash markets open - whether
we could see a new direction form off the basis of stress about
financial stability in China."
On Tuesday, China's benchmark Shanghai Composite index stood
on the precipice of a correction as investors wrestled with the
prospect of tighter policy and a slowing economic recovery.
With eyes on the $120 billion auctions of 3-, 10- and
30-year Treasuries this week, U.S. Treasury yields fell after a
weak 7-year note sale that prompted a spike in yields two weeks
ago was followed by another soft auction last week. The yield on benchmark 10-year notes US10YT=RR fell to
1.5281%, from 1.544% late on Tuesday.
Tuesday's auction of $58 billion in U.S. 3-year notes was
well received, with the next tests of investor appetite for
government debt in the form of 10-year and 30-year auctions
later this week.
On Wall Street, each of the major averages closed higher,
led by a gain of nearly 4% in the Nasdaq, giving the tech-heavy
index its best day since Nov. 4.
The index has been highly susceptible to climbing rates, and
Monday's retreat left it down more than 10% from its Feb. 12
close, confirming what is widely considered to be a correction.
"Today the 10-year is down a bit, and that takes pressure
off valuations, so tech is performing well. The market is just
about getting comfortable at this level of rates," said Kristina
Hooper, chief global market strategist at Invesco in New York.
The Dow Jones Industrial Average .DJI , after earlier
topping 32,150, rose 0.1% to end at 31,832.74, the S&P 500
.SPX gained 1.42% and the Nasdaq Composite .IXIC added
3.69%.
In Europe, stocks closed higher after extending gains from
their best session in four months a day earlier as a rise in
shares of oil and utility companies helped counter losses in
miners. The speedier rollout of COVID-19 vaccines in some countries
and the planned $1.9 trillion U.S. stimulus package helped
underpin a brighter global economic outlook, the Organisation
for Economic Cooperation and Development said, as it raised its
2021 growth forecast. In foreign exchange markets, the dollar index =USD backed
away from a 3-1/2-month high, allowing riskier currencies to
move higher.
The dollar index =USD fell 0.415%, with the euro EUR=
down 0.01% to $1.1897.
The Australian dollar rose 0.06% versus the greenback at
$0.772. The offshore Chinese yuan CNH= strengthened versus the
greenback at 6.5158 per dollar.
Oil prices backed off early highs in choppy trading, with
Brent dipping back to the $68 mark as investors weighed easing
concerns over a supply disruption in Saudi Arabia with the
likelihood of limited supply from OPEC+ output limits.
U.S. crude futures CLc1 settled at $64.01 per barrel, down
$1.04 or 1.60%. Brent crude futures LCOc1 settled at $67.52
per barrel, down 72 cents or 1.06%.
Gold surged more than 2% on the retreat in U.S. Treasury
yields and the weaker dollar, staging a strong recovery from the
nine-month low it hit in the previous session.
U.S. gold futures GCv1 settled up 2.3% at $1,716.90.

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