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

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EU stock futures, euro steady for now after retreat

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Wall St futures edge up before Fed, mega cap earnings

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Analysts warn tariffs a drag for EU and US economies

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Oil holds gains after Trump shortens Russia deadline

(Updates prices to Asia afternoon)

By Wayne Cole

SYDNEY, July 29 (Reuters) - Asia shares slipped on

Tuesday while the euro nursed its losses as investors pondered

the downside of the U.S.-EU trade deal and the reality that

punishing tariffs were here to stay, with unwelcome implications

for growth and inflation.

The initial relief over Europe's 15% levy quickly soured

when set against the 1% to 2% that stood before President Donald

Trump took office. Leaders in France and Germany lamented the

outcome as a drag on growth, pulling down stocks and bond yields

across the continent while slugging the single currency.

Trump also flagged a "world tariff" rate of 15% to 20% on

all trading partners that were not negotiating a deal, among the

highest rates since the Great Depression of the 1930s.

"While the worst case scenario was averted, the implied EU

tariff increase from 1% in January is a significant tax increase

on EU exports," wrote economists from JPMorgan in a note.

"This is a very big shock that unwinds a century of U.S.

leadership in global free trade," they warned. "While we no

longer see a U.S. recession as our baseline from this shock, the

risk is still elevated at 40%."

A further risk to world growth came from a sudden spike in

oil prices after Trump threatened a new deadline of 10 or 12

days for Russia to make progress toward ending the war in

Ukraine or face tougher sanctions on oil exports.

The air of caution saw MSCI's broadest index of Asia-Pacific

shares outside Japan slip 0.8%. Japan's Nikkei

lost 0.9%, while Chinese blue chips were flat.

European shares steadied after Monday's sell-off. EUROSTOXX

50 futures, FTSE futures and DAX futures

all edged up around 0.2%.

The euro was flat at $1.1587, after falling 1.3%

overnight in the largest drop since mid-May. It now has chart

support at $1.1556.

The dollar index was up at 98.675, after the rush out

of short dollar positions lifted it 1% overnight, while it eased

a one-week high on the yen to stand at 148.27.

Wall Street held firm on hopes for upbeat results from mega

caps this week that include Apple ( AAPL ), Meta Platforms ( META )

, Microsoft ( MSFT ) and Amazon ( AMZN ).

S&P 500 futures nudged up 0.1%, while Nasdaq futures

added 0.2%.

Yields on 10-year Treasuries held at 4.408%

having crept higher on Monday as markets braced for another

steady decision on interest rates from the Federal Reserve.

Futures imply a 97% chance the Fed will keep rates at

4.25%-4.5% at its meeting on Wednesday and reiterate concerns

that tariffs will push inflation higher in the short term.

Analysts also assume one, or maybe two, Fed officials will

dissent in favour of a cut and supporting wagers for a move in

September.

The odds could change depending on a slew of U.S. data this

week including gross domestic product for the second quarter

where growth is seen rebounding to an annualised 2.4%, after a

0.5% contraction in the first quarter.

Figures on job openings are due later on Tuesday that will

help refine forecasts for the crucial payrolls report on Friday.

Canada's central bank also meets on Wednesday and again is

widely expected to hold rates at 2.75% as it waits to see how

trade talks with the U.S. wash out.

In commodity markets, prices for copper and iron ore were

under pressure while gold idled at $3,315 an ounce.

Brent was off a fraction at $69.90 a barrel, having

climbed 2.3% on Monday, while U.S. crude held at $66.60.

(Editing by Jacqueline Wong and Sam Holmes)