GLOBAL MARKETS-Hong Kong leads Asian stocks lower, oil near 5-month lows

* Hong Kong shares down about 1.5% for second day
* Soft oil prices bolster expectations of Fed rate cuts
* Bond yields plunge; Japan at 3-year low, Australia at
record
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano
TOKYO, June 13 (Reuters) - Asian shares were led lower on
Thursday as the Hong Kong market fell for second consecutive
session following a day of massive street protests, while oil
prices flirted with five-month lows due to higher U.S. crude
inventories and a bleak demand outlook.
Hopes that the United States and China will clinch a deal on
the sidelines of a Group of 20 summit meeting in Osaka on June
28-29 have been fading, also hurting sentiment and driving bond
yields down.
"There's not even a plan of ministerial-level bilateral
meetings ahead of the G20 summit. You can't expect any major
agreement," said Hirokazu Kabeya, chief global strategist at
Daiwa Securities.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell as much as 1%, as Hong Kong's Hang Seng
Index .HIS dropped 1.5% following Wednesday's 1.7% fall.
The selling pressure in Hong Kong came after a mass
demonstration against legislation that would allow citizens to
be extradited to China triggered a mass protest and some of the
worst unrest seen in the territory since Britain handed it back
to Chinese rule in 1997. Japan's Nikkei .N225 lost 0.8% while U.S. stock futures
ESc1 lost 0.3% in Asia, following small losses the previous
day when the S&P 500 .SPX shed 0.20%.
Oil hovered near five-month lows, pressured by another
unexpected rise in U.S. crude stockpiles, as well as the bleaker
outlook for demand posed by prospects of a protracted trade war
between China and the United States.
Brent crude futures LCOc1 barely moved at $60.06 in early
trade after a 3.7% slide on Wednesday to $59.97 a barrel, the
international benchmark's lowest close since Jan. 28.
U.S. West Texas Intermediate crude futures CLc1 stood at
$51.12 per barrel, compared to the previous day's close of
$50.72 a barrel, its weakest settlement since Jan. 14.
"It is a bit of mystery that oil prices are so low when
global stock prices remain relatively supported. But one thing
is certain. Weaker oil prices will curb inflation and boost rate
cut expectations," said Daiwa's Kabeya.
Government data showed on Wednesday U.S. consumer prices
barely rose in May, with the core annual inflation
USCPFY=ECI slowing to 2.0%, compared to a peak of 2.4% last
July, adding to the growing expectations of a Federal Reserve
rate cut in coming months. Investors will be looking to what Fed policymakers will say
after its next policy meeting on June 18-19, with Fed Funds rate
futures 0#FF: pricing in a 25-basis-point rate cut for the
subsequent policy review on July 30-31.
The 10-year U.S. Treasuries yield dipped to 2.103 percent
US10YT=RR , near Friday's 2.053 percent, its lowest level since
September 2017.
Bond yields fell in Asia. Long-dated Japanese government
bond yields hit their lowest levels since August 2016, with
20-year yield JP20YTN=JBTC down 2.5 basis points at 0.220
percent.
In Australia, long known for its high-yield currency, yields
fell to record lows, with three-year yield now slipping below 1
percent AU3YT=RR .
In the currency market, the yen gained 0.25% to 108.25 to
the dollar JPY= as risk sentiment soured while the Australian
dollar dropped 0.2% to $0.6913 AUD=D4 .
The euro stood little changed at $1.1293 EUR= , having
taken a hit on Wednesday after U.S. President Donald Trump said
he was considering sanctions over Russia's Nord Stream 2 natural
gas pipeline project and warned Germany against being dependent
on Russia for energy. The British pound is on the back foot after British
lawmakers defeated an attempt led by the opposition Labour Party
to try to block a no-deal Brexit by seizing control of the
parliamentary agenda from the government. Sterling fetched $1.2688 GBP=D4 , not far from this week's
low of $1.2653.

(Editing by Simon Cameron-Moore)