* European stocks rebound after MSCI Asia ex-Japan ends down
0.3%
* U.S. bond yields steady after sharp dive, euro zone dips
again
* Yen sets 5-month high vs struggling dollar
* Australian stocks rise after RBA rate cut
* Oil lurking near bear territory
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, June 4 (Reuters) - European stock markets and Wall
Street futures clawed higher on Tuesday, though worries about a
clampdown on the world's internet and social media giants and
mounting recession jitters kept caution levels high.
Those nerves have pushed investors into top-rated government
bonds and other safety plays in recent weeks, and there was
little sign of a significant reversal as Europe reached
mid-session.
With markets now pricing in as many as three U.S. rate cuts
this year, benchmark 10-year U.S. Treasury yields steadied just
above 2%, German yields stayed near record lows and the dollar
skulked at a five-month low against Japan's yen JPY= . /FRX
The bounce by Europe's STOXX 600 .STOXX was helped by a
rise in Wall Street futures .N and by comments from Italian
Prime Minister Giuseppe Conte that Rome had to abide by European
Union budget rules for the time being, which cheered bank
stocks.
However it was capped at the other end by a more than 1.4%
drop in tech stocks .SX8P after news the U.S. government was
gearing up to investigate whether Amazon, Apple, Facebook and
Google misused their market power. That had wiped a combined $85 billion off Facebook and
Google parent Alphabet's values and pushed New York's tech-heavy
Nasdaq .IXIC into 'correction' territory, having taken its
losses over the last month past 10%.
"That (U.S. investigation) is currently weighing on stocks,
but more importantly the market is increasingly pricing in the
risk of recession," said Rabobank senior macro strategist Teeuwe
Mevissen.
He called money market pricing of nearly three U.S. rate
cuts before the end of the year "excessive", but Fed policy is
in now in sharp focus.
Ratesetter James Bullard said on Monday a cut "may be
warranted soon" given as the hostile trade rhetoric between the
U.S. and China and pressure on growth. Australia's central bank then cut its rates to a record low
overnight, while on Thursday the European Central Bank will
detail a fresh dump of cheap money and India is expected to
lower rates too.
"It is possible that the current policy settings will be
enough – that we just need to be patient. But it is also
possible that the current policy settings will leave us short,"
Aussie central bank Governor Philip Lowe said after its cut.
That had nudged the Australian dollar down and Sydney stocks
up. MSCI's broadest Asia-Pacific index .MIAP00000PUS ended
fractionally lower though as 0.9% and 0.5% drops in Chinese
bluechips .CSI300 and Hong Kong .HSI and a choppy day for
Tokyo pegged it back. .N225 .SS
SCRAMBLE TO SAFETY
The main focus remained on the bond market. U.S. Treasury
yields ticked back to 2.1% but Monday's low of 2.06 - the lowest
since September 2017 - was still within easy reach.
All this underlined the scramble to re-price Fed policy
after the biggest two-day drop in U.S. two-year Treasury yields
since the 2008 crash. The yield curve between three-month and
10-year debt was also still inverted by 25 basis points.
Adding to the rates rethink has been a recession-spooked
recoil in world oil prices. Brent crude futures are now testing
$60 per barrel for the first time in four months, having dropped
roughly 20 percent since topping $75 at the end of April.
They were last down 1.3% at $60.48 per barrel LCOc1 , while
U.S. crude CLc1 was down 0.7% at $52.95. In contrast,
safe-haven gold XAU= was up 0.1% at $1,326.47 per ounce, near
three-month highs.
Back in the currency markets, the dollar index, which
measures the greenback against a basket of currencies, slipped
to 96.995 .DXY , its weakest since April 18.
That was largely down to the yen gains and after the euro
had hit a six-week high, though the shared currency was pushed
back slightly to $1.1247 EUR=EBS after weaker-than-expected
euro zone consumer price inflation data. "Risk aversion has also been seen with the yen carry trade
unwinding as the markets comprehend that the U.S. technology
containment strategy towards China is unlikely to reverse,"
analysts at Jefferies said in a note.
"In the short term, positioning has become so bearish that
'a ceasefire' could spark a risk rally," they said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Record low RBA cash rate https://tmsnrt.rs/2QFJt4n
Yields, oil and stocks all locked in slide https://tmsnrt.rs/2QJ5GOZ
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Additional Reporting by Andrew Galbraith in Shanghai; Editing
by Larry King and Jan Harvey)