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Alibaba ( BABA ) shares slump almost 7% after earnings miss

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Oil steadies after 2% drop on potential US-Iran nuclear

deal

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Dollar on back foot versus safe-haven currencies

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Bonds extend rally on soft US data

By Stella Qiu

SYDNEY, May 16 (Reuters) - Asian stocks were ending a

strong week on a softer note on Friday as the euphoria over

U.S.-China trade talks faded, while revived bets for policy

easing in the United States sparked a rally in beaten-down bond

markets.

Oil prices steadied after plunging over 2% overnight on news

of a potential U.S.-Iran nuclear deal, but they are still up 1%

for the week as the global economic outlook brightened.

In Asia, shares of Alibaba ( BABA ) slumped 6.8% after

the tech giant's quarterly revenue failed to impress investors.

Their U.S.-listed shares slumped 7.6% overnight.

It has been a strong week for global sharemarkets as

investors cheered the trade war truce between the U.S. and

China, which has greatly lessened the chance of a global

recession. However, there are signs for caution heading into the

weekend.

Investors went back to selling the U.S. dollar against

the safe-haven currencies on Friday, with the dollar

down 0.4% on the Japanese yen and slipping 0.3% on the Swiss

franc.

"The markets confront a weekend with less risk of carrying

open positions than last, with no major trade talks or

significant risks on the calendar," said Kyle Rodda, senior

analyst at Capital.com

"However, there is always a slight risk-off bias going into

the weekend during a Trump presidency, with a nasty downside

surprise at the Monday open only ever one social media post

away."

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

Japan slipped 0.1% to 613.4 on Friday but it is

still set for a weekly rise of over 3%. Goldman Sachsraised its

12-month target for the Asian index to 660, from 620 before.

Chinese blue chips eased 0.2% and Hong Kong's Hang

Seng fell 0.6%.

Japan's Nikkei fell 0.4% after data showed its

economy shrank for the first time in a year in the March

quarter, underscoring the fragile nature of its recovery now

under threat from U.S. trade policies.

Nasdaq futures and S&P 500 futures were

both down 0.1% after Wall Street ended the day mixed. U.S.

retail sales were soft and the producer prices fell unexpectedly

in April, as markets added to the bets for a total easing of 56

basis points from the Federal Reserve this year.

That helped Treasuries rally after a brutal week. The

benchmark ten-year yields fell 3 basis points to

4.424% on Friday, having already dropped 7 bps overnight to move

away from its one-month top.

For the week, they are still up 8 bps.

The two-year yields were also down 2 bps to

3.947%, having fallen 8 bps overnight.

Fed Chair Jerome Powell said on Thursday that policymakers

felt they need to reconsider the key elements around both jobs

and inflation in their current approach to monetary policy.

In commodities markets, oil prices steadied. U.S. crude

futures bounced 0.1% to $61.71 a barrel while Brent

was at $64.61 per barrel, also 0.1% higher on the day.

In precious metals, gold prices fell 0.5% to $3,223

an ounce, after rallying 2% overnight. For the week, they are

down 3%.