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

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Fed seen cutting 25bps, focus on future easing plans

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BOE, BOJ and Norges seen on hold, Sweden to cut

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Rising Treasury yields underpin dollar, pressure stocks

By Wayne Cole

SYDNEY, Dec 16 (Reuters) - Asian share markets were in

a wary mood on Monday as surging bond yields challenged equity

valuations, particularly for the richly priced tech sector, in a

week packed with central bank meetings and major economic data.

Interest rates are expected to fall in the United States and

Sweden, and hold steady in Japan, the UK and Norway.

The Federal Reserve will lead the pack on Wednesday with

markets pricing a 96% probability it will cut rates by 25 basis

points to a new range of 4.25% to 4.50%.

More important will be any guidance on future easing,

including the "dot plot" forecasts of Fed members for rates over

the next couple of years.

"We look for the updated dots to signal a median expectation

for three cuts next year, down from four in the September

projection," said JPMorgan economist Michael Feroli. "The median

longer-run dot, which was 2.875% in September, we see moving up

to 3% or maybe even 3.125%."

"That said, given the vagaries of trade and other policies

next year, the signal from the dots may be even less useful than

ordinarily."

Investors have been steadily scaling back expectations of

how far rates may fall, in part reflecting solid economic news

and speculation President-elect Donald Trump's plans for tax

cuts and tariffs would expand government borrowing while putting

upward pressure on inflation.

Futures imply only two more cuts next year and rates

bottoming out around 3.80%, much higher than just a few months

ago. That outlook took a heavy toll on the Treasury market last

week, where longer-dated yields recorded their largest weekly

rise this year.

Yields on 10-year notes were up at 4.39%, having

climbed 24 basis points last week alone, and threatening to

breach a major bear target at 4.50%.

Rising yields make bonds more attractive versus equities

while lifting the level that future cash flows are discounted at

and possibly the cost of capital for companies.

Bitcoin grabbed the spotlight in early Asian trade on

Monday, surging to a record high above $105,000 as it extended

gains on bets Trump's return will usher in a

cryptocurrency-friendly regulatory environment.

S&P 500 futures were a fraction lower on Monday,

while Nasdaq futures eased 0.1%.

CHINA STRUGGLES

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

was little changed, having been flat last week.

Japan's Nikkei edged up 0.1%, while South Korea

bounced 0.7% on pledges of government support.

China's blue chip index took a hit on Friday as

investors awaited more detail on possible stimulus steps.

Over the weekend, an official at China's central bank said

it had room to further cut the reserve requirement ratio, though

credit numbers out last week showed past easing had done little

to boost borrowing.

Figures on Chinese retail sales, industrial production and

house prices for November are due out later Monday.

A range of surveys on global manufacturing are also due

Monday, while U.S. retail sales is due on Tuesday and a major

inflation report on Friday.

The Bank of Japan, Bank of England and Norges Bank are

expected to stand pat on Thursday, while the Riksbank is seen

cutting rates and perhaps by 50 basis points.

In currency markets, the dollar has been underpinned by

rising yields and put the squeeze on a raft of emerging market

currencies, forcing intervention in some cases.

The dollar likewise held firm on the yen at 153.53

, having jumped almost 2.5% last week. The dollar index

stood at 106.870, after rising 0.9% last week.

The euro looked wobbly at $1.0508, not helped by

news ratings agency Moody's unexpectedly downgraded France on

Friday.

The action came a few hours after French President Macron

appointed veteran centrist Francois Bayrou as the country's

fourth premier in a year.

Political uncertainty was also clouding South Korea where

the finance ministry vowed to support markets after President

Yoon Suk Yeol was impeached.

A firm dollar combined with higher bond yields to restrain

gold at $2,685 an ounce.

Bitcoin was having better luck, breaking above

$105,000 for the first time and was last fetching $104,955.

Oil prices were supported around three-week highs by

expectations that additional sanctions on Russia and Iran could

tighten supplies.

Brent was down 2 cents at $74.47 a barrel, while

U.S. crude eased 12 cents to $71.17 per barrel.