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Asian stock markets : https://tmsnrt.rs/2zpUAr4

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Nikkei dips, S&P 500 futures flat

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U.S. and European inflation data loom in holiday week

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Japan warns on yen weakness ahead of 152.00 per dollar

By Wayne Cole

SYDNEY, March 25 (Reuters) - Asian shares inched higher

on Monday as investors hoped U.S. inflation data this week would

not derail the outlook for lower interest rates, while the risk

of currency intervention from Japan stalled the yen's decline

for the moment.

The U.S. core personal consumption expenditure (PCE) price

index is seen rising 0.3% in February, which would keep the

annual pace at 2.8%. Anything higher would be taken as a setback

to hopes for a Federal Reserve rate cut in June.

Many markets are closed for Easter on Friday, when the PCE

data is due for release, so the full reaction will have to wait

until next week.

Fed Chair Jerome Powell was sufficiently dovish last week to

leave futures implying around a 74% chance of a June easing, up

from 55% a week earlier.

Powell will participate in a moderated discussion at a

policy conference on Friday, while Fed governors Lisa Cook and

Christopher Waller are also appearing this week.

Europe has its own inflation tests with consumer price data

out from France, Italy, Belgium and Spain, ahead of the overall

EU CPI report on April 3.

Sweden's central bank meets on Wednesday and is generally

expected to keep rates at 4.0%, though a surprise easing by the

Swiss National Bank (SNB) last week has markets anticipating a

dovish statement.

Expectations for falling borrowing costs globally has been a

boon for equities, with the S&P 500 up almost 10% for the year

to date. Early Monday, S&P 500 futures and Nasdaq futures

were trading little changed.

MSCI's broadest index of Asia-Pacific shares outside Japan

edged up 0.1%, to just below eight-month highs.

Japan's Nikkei dipped 0.4%, having spiked 5.6% last

week to a fresh all-time peak as the yen weakened.

While the Fed sounded dovish last week, it was hardly alone,

with the Swiss central bank (SNB) actually cutting rates while

the Bank of England (BoE) and European Central Bank (ECB) left

markets looking for easings from June onwards.

The People's Bank of China (PBOC) also surprised markets on

Friday by letting the yuan fall past 7.2 per dollar

to four-month lows amid talk it was set to ease policy further.

JAPAN JAWBONES THE YEN

"We think the dollar's rebound reflects the more explicitly

dovish stance of other major central banks - in particular the

SNB and the BoE," said Jonas Goltermann, deputy chief markets

economist at Capital Economics.

"The PBOC's apparent decision to let the renminbi weaken

sharply has added to the overall dollar-positive tone," he

added. "Overall, the greenback heads into the Easter holiday

period firmly on the front foot, and continued solid U.S.

economic data is likely to keep it that way."

Even a shift away from super-easy policies by the Bank of

Japan (BOJ) could not dent the dollar, as investors assumed it

was not the start of a series of hikes and futures imply a rate

of just 20 basis points by year end.

On Monday, the dollar was holding at 151.30 yen,

having climbed 1.6% last week to a peak of 151.86. Markets are

wary of testing 152.00 as that is a level that has drawn

Japanese intervention in the past.

Indeed, Japan's top currency official on Monday warned the

yen's current weakness did not reflect fundamentals and

excessive moves were unwelcome.

The euro was pinned at $1.0808, having been

dragged down in the wake of the Swiss franc after the

SNB's shock rate cut.

The strength of the dollar took some shine off gold which

stood at $2,168 an ounce, after hitting a record peak of

$2,217.79 last week.

Oil prices were underpinned by Ukraine's attacks on Russian

refineries, along with data showing a fall in U.S. rig counts.

Brent rose 21 cents to $85.64 a barrel, while U.S.

crude edged up 23 cents to $80.86 per barrel.