GLOBAL MARKETS-Fears of deeper U.S.-China trade war push Asian shares to 4-mth low

* Trump: 'Dangerous' Huawei could be included in China trade
deal
* Wall St stocks slide, 10 yr Treasury yield hits lowest in
17
mths
* Dollar hits 2-yr high, pound at 4-1/2 mth low; Oil
plummets 5.7%
* MSCI Asia-ex Japan index on track for 3rd straight losing
week
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tomo Uetake
Tokyo, May 24 (Reuters) - Asian stocks stumbled to a
four-month low on Friday and crude oil plunged on worries the
U.S.-China trade spat was developing into a more entrenched
strategic dispute between the world's two largest economies,
pushing investors to safe-haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS edged down 0.2 percent to a fresh four-month
low, and was on track for a third straight weekly loss, down
1.0% so far on the week.
Chinese shares recovered slightly, with the benchmark
Shanghai Composite .SSEC up 0.2% and the blue-chip CSI 300
.CSI300 rising 0.3%, while Hong Kong's Hang Seng .HSI added
0.2%.
Japan's Nikkei average .N225 dropped 0.7%.
On Wall Street, the Dow Jones Industrial Average .DJI fell
1.1%, the S&P 500 .SPX lost 1.2% and the Nasdaq Composite
.IXIC dropped 1.6%, as traders dumped cyclical names on fears
that the escalating U.S.-China trade war would stymie global
economic growth. .N
U.S. President Donald Trump said on Thursday that
Washington's complaints against Huawei Technologies HWT.UL
might be resolved within the framework of a U.S.-China trade
deal, while calling the Chinese telecom giant "very dangerous."
Washington last week effectively banned U.S. firms from
doing business with Huawei, the world's largest networking gear
maker, citing national security concerns.
The U.S. Commerce Department said on Thursday it was
proposing a new rule to impose anti-subsidy duties on products
from countries that undervalue their currencies against the
dollar, another move that could slap higher tariffs on Chinese
products. China's Commerce Ministry hit back on Thursday, with its
spokesman saying the United States wants to continue trade
talks, they should show sincerity and correct their wrong
actions."
Masanari Takada, cross-assets strategist at Nomura
Securities in Tokyo, said the U.S.-China trade conflict "has not
yet fully dented the global investor sentiment, so there is no
panic-selling. But at the same time, the sentiment will likely
remain weak."
As flight-to-safety plays dominated global markets, the
benchmark 10-year U.S. Treasury note US10YT=RR yield hit
2.292%, the lowest level since mid-October 2017, with the key
parts of the yield curve inverted. The yield last stood at 2.326
percent.
Chotaro Morita, chief fixed income strategist at SMBC Nikko
Securities, said big falls shown in a fresh U.S. manufacturing
survey appear to reflect expectations of a breakdown in the
U.S-China trade talks.
"In the last couple of years, the PMI has had a very small
gap with hard data, such as industrial output. So if that holds
true this time, we could see factory production plunging into
negative levels (compared to a year ago)."
"Since the global financial crisis, U.S. output has fallen
only once: from 2015 to early 2016 when the shale industry was
badly hit. Markets could start to fret over a global slowdown as
they have done late last year."
The dollar index .DXY , which measures it against six
major currencies, hit a high of 98.371 on Thursday U.S. time. It
was last quoted at 97.872, little changed on the day.
The euro on Thursday slumped to levels last seen in May
2017 as a recovery in euro zone business activity was weaker
than expected. Early Friday, the currency was steady on the day
at $1.1181 EUR= .
Sterling weakened again on Thursday as pressure mounted on
British Prime Minister Theresa May to name a date for her
departure after a backlash over her last-ditch plans for
Britain's exit from the European Union. While some domestic media said May's time was up, foreign
minister Jeremy Hunt said she would still be prime minister when
Trump arrives for a visit trip on June 3.
The pound was last traded at $1.2661 GBP=D4 , little
changed on the day. Sterling suffered its 14th consecutive day
of losses against the euro on Thursday, its longest losing
streak on record. It stood at 0.8831 pound to the euro
EURGBP= .
Other major currencies were relatively calm, with the
safe-haven yen still supported but not aggressively so.
The dollar was holding at 109.56 yen JPY= , almost flat on
the day.
In commodity markets, oil prices tumbled on Thursday as
trade tensions dampened the demand outlook, with the crude
benchmarks posting their biggest daily falls in six months. O/R
Oil prices stabilised on Friday amid OPEC supply cuts and
tensions in the Middle East.
In Asian trade, U.S. crude CLc1 rebounded 0.9% to $58.46 a
barrel, after Thursday's 5.7% fall that took it to the lowest in
two months. Brent crude LCOc1 futures rebounded 1.0% to $68.46
per barrel, after falling 4.6% in the previous session.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>