*

China retail data badly misses forecasts

*

European PMIs weak again

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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

(Updates with early European trading)

By Wayne Cole and Alun John

SYDNEY/LONDON, Dec 16 (Reuters) - Shares around the

world nudged lower on Monday on soft economic numbers from China

and Europe and as surging bond yields challenged equity

valuations, at the start of a week packed with central bank

meetings and major economic data.

Figures from China showed retail sales rose just 3.0% in

November, compared with a year earlier, well below market

forecasts of 4.6% and evidence of the need for much more

aggressive stimulus. Industrial production was much as expected,

while house prices were still falling, though at a slower pace.

The data showed China "is not yet out of the woods", said

Erin Xin, Greater China economist at HSBC in a note, adding she

expected China to ease monetary policy further and expand

support for consumption and the property sector, though details

may not come until 2025.

China's blue chip index eased 0.5%, having dropped

more than 2% last Friday.

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

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

amount of cash banks must hold as reserves, though credit

numbers out last week showed past easing had done little to

boost borrowing.

European stocks also nudged down, off 0.1%, not

helped by soft business activity data from Germany, which showed

a sixth straight month of contraction, and France. That left

MSCI's world share index a fraction lower. U.S.

share futures held steady.

Investors were also digesting ratings agency Moody's

unexpectedly downgrading France on Friday.

The action came a few hours after French President Emmanuel

Macron appointed veteran centrist Francois Bayrou as the

country's fourth prime minister in a year.

French government bonds slightly underperformed German bunds

in early trading Monday.

Political uncertainty was also clouding South Korea, where

the finance ministry promised to support markets after the

impeachment of President Yoon Suk Yeol. Stocks in Seoul

and the won were both down slightly on Monday but in line

with Asian peers.

EYEING CENTRAL BANKS

The big events of the week are central bank meetings, and

market pricing shows rate-setters in the United States and

Sweden are expected to cut, while policymakers in Japan, Britain

and Norway hold steady.

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 at 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 4.38%, having

climbed 24 basis points last week alone, and threatening to

breach a major bear target at 4.50%.

Bitcoin was also in the spotlight, surging to a

record high above $106,000 as it extended gains on bets Trump's

return will usher in a cryptocurrency-friendly regulatory

environment.

In currency markets, the dollar has been underpinned by

rising yields. That has put the squeeze on a raft of emerging

market currencies, forcing intervention in some cases.

The dollar likewise held firm on the yen at 153.7,

having jumped almost 2.5% last week, while the euro looked

wobbly at $1.0512.

Gold was at $2,657 an ounce, and oil prices came off

three-week highs, having been supported by expectations that

additional sanctions on Russia and Iran could tighten supplies.

Brent futures were down 38 cents at $74.12 a

barrel.