GLOBAL MARKETS-Asian stocks shed gains as China worries grow

By Alun John and Chris Prentice
HONG KONG/WASHINGTON, March 23 (Reuters) - Asian stocks
reversed earlier gains on Tuesday, weighed by Chinese markets as
investors took profit on a recent rally in some mainland firms,
although ebbing inflation fears helped shore up broader
sentiment in the region.
Investors now await a closely watched Congressional
appearance by U.S. Federal Reserve Chair Jerome Powell and
Treasury Secretary Janet Yellen later in the day.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS dropped 0.57%, hurt by a 1.5% fall in Chinese
blue chips .CSI300 .
Gary Ng, economist at Natixis, said Chinese shares had run
ahead of other Asian markets recently, which meant they were due
for some kind of correction.
Overnight announcements of new sanctions also did not help
Chinese stocks, even though analysts said markets had become
fairly accustomed to such developments.
The United States and others including the European Union
sanctioned Chinese officials on Monday for human rights abuses
in Xinjiang, and Beijing hit back with punitive measures against
European lawmakers, diplomats, institutes and families.
Jin Jing, an analyst with China Fortune Securities, said
sanctions hurt risk appetite, in particular for foreign
investors, who sold shares via the Stock Connect.
Persistent worries of policy tightening at home also
continued to weigh on high-flying sectors and stocks with lofty
valuations as investors turned cautious.
Beyond China, Asian shares were mixed after Wall Street's
gains on Monday as investors cheered a break in the recent
run-up of bond yields.
The Dow Jones Industrial Average .DJI rose 0.32%, the S&P
500 .SPX gained 0.70% and the Nasdaq Composite .IXIC added
1.23%.
Developed markets and emerging Asia also managed to digest a
surprise move by Turkey's President to replace the central bank
governor with a critic of high interest rates.
"It doesn't appear that you're going to see much contagion
from Turkey," said Alex Wolf, head of investment strategy for
Asia at J.P. Morgan Private Bank citing "pretty strong flows
into Asia".
"Investors are less looking at emerging markets as one giant
bloc."
Benchmark 10-year notes US10YT=RR ticked up slightly, last
yielding 1.6857%, but down from 1.732% late on Friday.
"U.S. risk assets were aided by a dip in Treasury yields to
start the week. Movements in yields will continue to be closely
watched this week amid a series of U.S. Treasury auctions and
testimony by Treasury Secretary Yellen and Fed Chair Powell,"
ANZ Research said in a daily note.
Fed Chair Powell said in remarks prepared for a
congressional hearing on Tuesday that the U.S. recovery had
progressed "more quickly than generally expected and looks to be
strengthening". The dollar's index against a basket of six major currencies
=USD stood almost flat in early Asian trade at 91.853, having
slipped 0.32% on Monday.
But oil dropped amid ample supply and concerns that new
pandemic curbs and slow vaccine rollouts in Europe will slow a
recovery in fuel demand.
U.S. West Texas Intermediate crude oil futures
dropped 1.28% and Brent crude futures LCOc1 dropped by 1.27%.