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

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Asia closes lower, but S&P 500 futures bounce

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Soft China inflation data signals weak demand

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Dollar bounces vs yen as yields come off lows

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ECB seen cutting 25 bps on Thursday, Fed the same next

week

(Adds quote in paragraph 7, updates prices as of 0910 GMT)

By Nell Mackenzie and Wayne Cole

LONDON/SYDNEY, Sept 9 (Reuters) - World equities

dithered at four-week lows on Monday, pressured by falling

stocks in Asia, while European shares climbed on the prospect of

an ECB rate cut on Thursday, government bond yields rose, and

oil recovered from last week's beating.

MSCI's gauge of stocks around the globe fell

1.94 points or 0.24% to its lowest level in almost a month,

while Europe's STOXX 600 index rose 0.61%.

Data on Monday showed China's consumer prices index rose in

August at the fastest pace in half a year as food prices

increased due to weather disruption, but was short of market

expectations. Producer price deflation worsened, reflecting the

underlying trend of a struggling economy.

This sent China's blue-chip index to close down

1.2%, hitting the lowest level since early February. The

Shanghai Composite Index finished down 1.1%. while Hong

Kong's Hang Seng Index lost 1.4%.

Japan's Nikkei fell roughly 0.5% as tech stocks

declined.

"We are still looking back at Friday with people in Asia

positioning for 25 basis point, not 50 basis point cuts. We'll

see if the equity markets get nervous but at the moment all

seems in good nick," said Kit Juckes, FX strategist at Societe

Generale.

European stock markets opened higher and continued to climb

with all regional bourses up over 0.5% .

Centre stage this week will be Thursday's European Central

Bank rate decision. The ECB, which cut rates by 25 basis points

(bps) in June, is widely expected to ease policy by the same

amount.

S&P 500 futures rallied 0.6% and Nasdaq futures

were up roughly 0.8%, following Friday's slide.

Fed fund futures dipped as investors wondered

whether the mixed U.S. August payrolls report would be enough to

tip the Federal Reserve into cutting rates by an outsized 50 bps

when it meets next week.

So far, markets imply a 30% chance of a large cut, in part

due to comments from Fed Governor Christopher Waller and New

York Fed President John Williams on Friday, though Waller did

leave open the option of aggressive easing.

"Our read of the data is that the labour market continues to

cool, but we see no sign of the kind of rapid deterioration in

conditions that would call for a 50 bps rate cut," Barclays

economist Christian Keller said.

"Importantly, we also see no indication of any appetite for

this in Fed communications," he added.

Investors are more dovish and price in 113 bps of easing by

year-end and another 132 bps for 2025.

Data on August U.S. consumer prices on Wednesday should

underline the case for a cut, if not the size, with headline

inflation seen slowing to 2.6% from 2.9%.

Tuesday will see Democrat Kamala Harris and Republican

Donald Trump debate for the first time ahead of the presidential

election on Nov. 5.

YIELDS SLOW TO EASE

Euro zone and U.S. government bond yields rose after falling

on Friday's U.S. jobs data.

There was a modest underperformance of French bonds after

French newspaper La Tribune de Dimanche on Sunday reported that

the French finance ministry had requested an extension to the

deadline for submitting its 2025 budget to the EU beyond Sept.

20.

U.S. 10-year Treasury yields rose 5 bps to 3.76%

, moving away from last week's 15-month lows.

Two-year yields were also up around 5 bps, having hit

March 2023 depths last week.

The yen also gave up some of its gains as the dollar firmed

0.8% to 143.30 yen. The euro dipped 0.3% to $1.1049

, having briefly been as high as $1.1155 on Friday.

Oil prices found some support as a potential hurricane

system approached the U.S. Gulf Coast, having fallen almost 10%

last week in their biggest weekly fall in 11 months amid

persistent concerns about global demand.

Brent rose 63 cents to $71.70 a barrel, while U.S.

crude climbed 66 cents to $68.33 per barrel.