* U.S., European stock futures drop 0.2-0.3%
* Nikkei down 0.8%, Asian shares almost flat
* Retail sales highlights fragile state of U.S. economic
recovery
* U.S. 10-yr bond yield falls back to 0.85%
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano and Chibuike Oguh
TOKYO/NEW YORK, Nov 18 (Reuters) - Global shares stepped
back on Wednesday as soft U.S. retail sales fuelled worries that
rising coronavirus cases could stifle a still fragile economic
recovery, dampening the euphoria from vaccine trial
breakthroughs.
U.S. S&P500 futures ESc1 shed 0.3% in Asian trade on
Wednesday, a day after S&P500 index lost 0.48%, while Europe's
Euro Stoxx 50 futures STXEc1 eased 0.2%.
Japan's Nikkei .N225 dropped 0.76%, while MSCI's broadest
index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was
little changed, drawing support from better handling of the
pandemic in much of the region.
"Given the rapid gains over the last 10 days or so, a
correction was inevitable," said Hirokazu Kabeya, chief global
strategist at Daiwa Securities.
Global stocks, measured by MSCI's broadest gauge of world
equities .MIWD00000PUS , have risen more than 11% so far this
month.
The retail sales report released by the U.S. Commerce
Department showed spending decelerating as the holiday shopping
season approaches, amid a lack of fresh fiscal relief from
Washington. A skittish mood also swept investors as several U.S. states
began restricting gatherings and mandating face-coverings after
more than 70,000 Americans were hospitalized for treatment of
COVID-19 as of Monday, according to a Reuters tally of public
health figures.
The surge in new coronavirus cases comes as investors have
hailed two promising vaccine trial results published earlier
this month.
"We're are coming out of a solid two weeks so the market
being down half a percent isn't that bad with the prospect of
COVID lockdowns," said Jamie Cox, Managing Partner for Harris
Financial Group.
U.S. Federal Reserve Chairman Jerome Powell noted the
current surge in coronavirus cases is a big concern, and the
economy will continue to need both fiscal and monetary policy
support. "The soft U.S. retail data is showing the impact of
dwindling fiscal support. But the inconvenient truth is that
governments no longer have lots of money to spend like they did
earlier this year," said a trader at a major Japanese bank.
"That means investors will expect the Fed to do more and the
U.S. yield curve will flatten."
Bond yields have come down with the 10-year U.S. Treasuries
dropping to 0.851% US10YT=RR , its lowest level since Nov. 9
and off 7 1/2-month high of 0.975% touched last week.
Falling U.S. yields put pressure on the U.S. dollar, against
the yen in particular.
The dollar fell to 104.18 yen JPY= , erasing more than a
half of its gains made on Monday last week following the news
about COVID-19 vaccine development.
The euro moved little at $1.1864 EUR= while the Chinese
yuan hit a 2 1/2-year high of 6.5455 per dollar in the offshore
trade CNH=D4 .
Sterling held firm after UK tabloid the Sun reported that
Britain could reach a post-Brexit trade agreement with the
European Union by early next week. The pound changed hands at $1.3252 GBP=D4 , not far from
two-month peak of $1.3322 hit a week ago.
Oil prices eased on a bigger-than-expected build in U.S.
crude stockpiles, though hopes that OPEC and its allies will
postpone a planned January increase to oil output braked losses.
O/R
Brent crude futures LCOc1 fell 0.35% to $43.60 per barrel
LCOc1 .
(Editing by Kim Coghill)