GLOBAL MARKETS-Asian shares wobble on trade, political tensions; focus turns to Fed meet

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Dollar index holds near 2-week high after strong U.S.
retail
data
* Investors await FOMC: BOJ, BOE also meet this week
* Bitcoin jumps to 13 month high

By Tomo Uetake
TOKYO, June 17 (Reuters) - Asian shares got off to a shaky
start on Monday as investors were cautious ahead of a
closely-watched Federal Reserve meeting, while political
tensions in the Middle East and Hong Kong kept risk-appetite in
check.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS opened slightly lower and was last little
changed, while Japan's Nikkei average .N225 stood flat.
Wall Street stocks ended lower on Friday as investors turned
cautious before this week's Fed meeting, while a warning from
Broadcom on slowing demand weighed on chipmakers and added to
U.S.-China trade worries. .N
"The week ahead is likely to provide some clarification for
investors on three fronts that have been a source of
uncertainty. The FOMC meeting, with updated forecasts, is centre
stage," said Marc Chandler, chief market strategist at
Bannockburn Global Forex.
A private gauge on eurozone's manufacturing sector as well
as U.S.-China trade frictions will also be watched closely,
Chandler said.
Financial markets have been sideswiped since a sudden
escalation in Sino-U.S. trade tensions in early May, with
growing anxiety among investors that a protracted standoff could
tip the global economy into recession. Adding to the tensions between the world's two biggest
economies, U.S. Secretary of State Mike Pompeo told Fox News on
Sunday that U.S. President Donald Trump would raise the issue of
Hong Kong's human rights with China's President Xi Jinping at a
potential meeting of the two leaders at the G20 summit in Japan
later this month. On Sunday, hundreds of thousands of black-clad protesters in
Hong Kong demanded that Beijing-backed city leader Carrie Lam
step down over her handling of a bill that would have allowed
extradition to China, resulted her to issue a rare
apology. Geopolitical tensions in the Middle East added another layer
of uncertainty for investors after the United States blamed Iran
for attacks on two oil tankers in the Gulf of Oman last
week. Hopes that global central banks will keep the money spigot
open have helped to temper some of the fears, and all eyes are
on the Fed's two-day meeting starting on Tuesday.
Strong U.S. retail sales data on Friday rolled back
expectations of a Fed rate cut at this week's meeting to 21.7%,
from 28.3% on Thursday, according to CME Group's FedWatch tool.
But bets of an easing at the July meeting remain high at
85%. The Bank of Japan also meets this week and is widely
expected to reinforce its commitment to retain a massive
stimulus program for some time to come.
The retail report also sent short-dated U.S. Treasury yields
higher, flattening the yield curve. L2N23L10H
Benchmark 10-year notes US10YT=RR was last at 2.091%,
while two-year bond yield US2US10=TWEB edged up, shrinking the
spread between two- and 10-year yields to 23.6 basis points
compared to more than 30 earlier this month.
A Reuters poll showed a growing number of economists expect
the Fed policymakers to cut interest rates this year, although
the majority still see it holding steady. In currency markets, the dollar index against a basket of
six major currencies .DXY climbed to 97.583 on Friday, its
highest level in almost two weeks, after the U.S. retail sales
data eased fears that the world's largest economy is slowing
sharply. The index last stood at 97.511, while the euro EUR=
fetched $1.1220, near the lower end of its weekly trading range.
Oil extended gains on Monday after the attacks on two oil
tankers last week raised concerns about potential supply
disruptions, but prices remained on track for a weekly loss on
fears that trade disputes will dent global oil demand. O/R
Brent futures LCOc1 rose 0.2% to $62.13 a barrel, while
U.S. West Texas Intermediate (WTI) crude futures CLc1 rose
0.2% to $52.60.
Spot gold XAU= eased 0.1% to $1,340.25 an ounce after
hitting a 14-month peak on Friday.
Bitcoin BTC=BTSP jumped overnight to $9,391.85, its
highest level in 13 months. It was last quoted at $9150.15.