March 11 (Reuters) - A look at the day ahead in Asian

markets.

Signs of fatigue on Wall Street and mixed Chinese inflation data

will set the tone for Asian markets on Monday, with growing

expectations of a landmark policy change later this month from

the Bank of Japan also likely to drive the Nikkei and yen.

Asia's economic calendar is light, with only the final reading

of fourth-quarter Japanese GDP on tap. A Reuters poll suggests

the economy avoided a technical recession thanks to

stronger-than-expected corporate spending on plants and

equipment.

Inflation data from China on Saturday showed that consumer

price inflation was notably higher than expected, but producer

price deflation accelerated once again.

Annual consumer inflation rose to 0.7%, the highest in

almost a year and a sign that the economy is reflating and the

battle against deflation may be turning in policymakers' favor.

But the producer price index fell 2.7% year-on-year, more

than forecast and the 17th consecutive month that prices have

declined on an annual basis. Pipeline price pressures remain

negative.

Deflation is one of investors' biggest concerns over China.

Bubbling U.S.-Sino trade tensions is another, and on Friday

Bloomberg reported that Washington is weighing sanctions on

several Chinese tech companies, including chipmaker ChangXin

Memory Technologies, in a bid to further restrain China's

development of advanced semiconductors.

Capital has flooded out of China for some time, but analysts at

the Institute of International Finance say this tide may be

turning - China posted its first equity inflow in six months in

February and its largest in over a year.

Trading in the Japanese yen, meanwhile, is intensifying as the

BOJ's March 18 to 19 policy meeting draws closer and speculation

mounts that it will bring down the curtain on years of

ultra-loose policy and negative interest rates.

The yen last week registered its best week since July,

rising 2% against the dollar. On the other side of the

dollar/yen exchange rate, traders now see the Fed cutting rates

in June.

Dollar/yen could have more room to fall, if hedge funds and

speculators continue to cover their short yen position, which

was the largest in six years at the end of February. Data shows

that funds trimmed this by around 10% in the week to March 5.

The global backdrop to the Asian open on Monday is mixed. On

the one hand, signs are pointing to U.S. and euro zone rate cuts

starting in June. But on the other, there are signs that the

remarkable rally on Wall Street is running out of steam.

The S&P 500 and Nasdaq ended lower last week. It may have

been only the third weekly decline in 19 for both, but it came

despite a notable decline in Treasury yields and the dollar's

biggest weekly loss this year.

Here are key developments that could provide more direction

to markets on Monday:

- Japan GDP (Q4, final)

- Japan money supply (February)

- U.S. 3-year bond auction