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Producer price data prompts wobble on Wall Street

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Nikkei resumes advance as GDP beats estimates

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Markets awaiting U.S.-Russia meeting in Alaska

By Gregor Stuart Hunter

SINGAPORE, Aug 15 (Reuters) - Stocks in Asia made an

uneven recovery as higher-than-expected producer price inflation

dampened expectations of a jumbo rate cut at the Federal

Reserve's September meeting, while U.S. bonds and equity futures

stabilised.

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

was down 0.3% after a report on Thursday from

the Bureau of Labor Statistics which showed the Producer Price

Index increased 0.9% in July on a month-over-month basis, well

above economists' expectations.

"What it did was to get rid of all the chat about a 50 basis

point cut," said Mike Houlahan, director at Electus Financial

Ltd in Auckland.

The market is currently pricing in a 92.1% probability of a

25 basis point rate cut at its September meeting, compared with

a 100% likelihood of a cut on Thursday, according to the CME

Group's FedWatch tool. The chance of a jumbo 50 basis point cut

fell to 0% from an earlier expectation of 5.7% a day ago.

U.S. stock futures were flat in early Asian trading

after ending a choppy trading session on Wall Street with mild

gains on Thursday. The yield on the U.S. 10-year Treasury bond

was down 1 basis point at 4.2829%.

The two-year yield, which is sensitive to

traders' expectations of Fed fund rates, slipped to 3.7304%

compared with a U.S. close of 3.739%. Nasdaq futures

extended losses into a third consecutive day, sliding 0.1%

lower.

The dollar index, which tracks the greenback against

a basket of currencies of other major trading partners, retraced

some gains after the PPI data release, last trading down 0.1% at

98.143.

The Nikkei 225 rebounded 0.4% after snapping a

six-day winning streak on Thursday with its biggest one-day

selloff since April 11, as Japanese GDP data showed the economy

expanding by an annualised 1.0% in the April-June quarter,

beating analyst estimates. The dollar weakened 0.3% against the

yen to 147.64.

Australian shares were last up 0.2%, while stocks in

Hong Kong were down 0.9% following losses on Thursday for

U.S.-listed exchange-traded funds tracking Chinese companies.

The CSI 300 gave up early gains and was last

trading flat after the release of weaker-than-expected Chinese

economic data

for July including retail sales and industrial production.

Markets in India and South Korea are closed for public

holidays.

Cryptocurrency markets stabilised after a new record for

bitcoin of $124,480.82 on Thursday proved fragile and

promptly crumbled after falling short of its next key milestone.

The digital currency was last up 0.7%, recovering some ground,

while ether gained 1.7%.

"Bitcoin's failure to conquer the $125,000 resistance

signals another consolidation phase," said Tony Sycamore, a

market analyst at IG in Sydney.

In commodities markets, Brent crude was flat at

$66.94 per barrel ahead of a meeting in Alaska between U.S.

President Donald Trump and Russian leader Vladimir Putin.

Gold was slightly lower as the markets digested the path of

inflation-adjusted interest rates, which typically move in the

opposite direction from bullion prices. Spot gold was

trading up 0.1% at $3,339 per ounce.

In early European trades, the pan-region futures

were up 0.4%, German DAX futures were up 0.3% at 24,489,

and FTSE futures were up 0.5%.