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

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S&P 500 futures, Nikkei slip in early trade

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China retail sales miss forecasts, factory output beats

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Treasuries, dollar smart at Moody's downgrade

(Adds China data, EU election news)

By Wayne Cole

SYDNEY, May 19 (Reuters) - Asian shares slipped on

Monday as a mixed bag of Chinese economic data showed the

domestic economy was struggling even as U.S. tariffs began to

bite into exports, while the White House kept up its rhetorical

pressure on trade partners.

Wall Street share futures also slipped with the dollar,

while Treasury yields rose as concerns about erratic U.S.

economic policies were underlined by Moody's downgrade of the

country's credit rating.

Unease over the United States' $36 trillion of debt has also

mounted as Republicans seek to approve a sweeping package of tax

cuts, which some estimate could add $3 trillion to $5 trillion

in new debt over the next decade.

U.S. Treasury Secretary Scott Bessent used television

interviews on Sunday to dismiss the downgrade, while warning

trade partners they would be hit with maximum tariffs if they

did not offer deals in "good faith".

Bessent is off to a G7 meeting this week for more talks,

while U.S. Vice President JD Vance and European Commission

President Ursula von der Leyen met on Sunday to discuss trade.

"It remains to be seen whether the 10% reciprocal rate -

excluding Canada and Mexico - will broadly remain, or will go up

or down for some countries," said JPMorgan economist Michael

Feroli, who estimates the current effective tariff of around 13%

was equal to a tax rise worth 1.2% of GDP.

"Beyond disruptions from higher tariffs themselves, policy

uncertainty should additionally weigh on growth."

The tariff war has weighed heavily on consumer sentiment and

analysts will be scouring earnings from Home Depot ( HD ) and

Target ( TGT ) this week for an update on spending trends.

In markets, MSCI's broadest index of Asia-Pacific shares

outside Japan eased 0.2%, with Japan's Nikkei

down 0.6%.

Chinese blue chips eased 0.4% as retail sales

missed forecasts for April, while industrial output slowed but

not by as much as feared.

EUROSTOXX 50 futures added 0.1%, while FTSE futures

eased 0.1% and DAX futures were flat.

DOLLAR DOUBTS

S&P 500 futures lost 0.8% and Nasdaq futures

1.1%, though that followed major rallies last week in the wake

of President Donald's Trump decision to lower levies on China.

Yields on 10-year Treasuries rose another 5

basis points to 4.49%, extending Friday's reversal on the

Moody's news.

Markets are still pricing in only 53 basis points of Federal

Reserve rate cuts this year, compared to more than 100 basis

points a month ago. Futures imply just a 33% chance of a move by

July, rising to 72% by September.

A host of Fed speakers are on the diary this week, including

influential New York Fed President John Williams and Vice Chair

Philip Jefferson later on Monday. Fed Chair Jerome Powell is

also due to speak on Sunday.

The Reserve Bank of Australia is widely expected to cut its

rates at a meeting on Tuesday, while likely signalling it is

still cautious about easing too far.

Higher yields offered little comfort to the dollar, which

was drifting lower amid investor unease with the volatility of

U.S. trade policy. The euro edged up 0.1% to $1.1180,

while the dollar slipped 0.3% to 145.19 yen.

In an interview published over the weekend, European Central

Bank President Christine Lagarde said the dollar's recent

decline reflected a loss of confidence in U.S. policies and this

could benefit the euro currency.

Sentiment on the euro was aided by a surprise victory for

the centrist candidate in Romania's presidential election over a

far right anti-EU opponent. Centrist candidates also fared well

in elections in Poland and Portugal.

In commodity markets, gold was on the rise again after

shedding almost 4% last week. The metal was trading 0.6% firmer

at $3,222 an ounce.

Oil prices struggled on concerns about the risk of increased

output from OPEC and Iran.

Brent inched down 19 cents to $65.22 a barrel, while

U.S. crude eased 15 cents to $62.34 per barrel.