* MSCI Asia ex-Japan +0.5%; China blue-chips drag
* Elections lift shares in Australia, India
* Oil up more than 1.3% after Saudi minister comments
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Andrew Galbraith
SHANGHAI, May 20 (Reuters) - Asian shares clawed back some
of last week's losses as investors cheered apparent election
wins for conservative incumbents in Australia and India, while
broader global trade worries eased after Washington offered to
lift some tariffs in North America.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 0.54%, reflecting modest gains in markets
across the region after the broad index finished at its lowest
since Jan. 24 on Friday, down 3% for the week.
However, the rally looks unlikely to extend to Europe. In
early European trades, pan-region Euro Stoxx 50 futures STXEc1
were down 0.21% at 3,393, German DAX futures FDXc1 slipped
0.16% to 12,227, FTSE futures FFIc1 were 0.01% lower at
7,334.5, and France's CAC 40 futures FCEc1 lost 0.2% to
5,361.5.
Australian shares .AXJO underpinned the firmer mood in the
region, jumping 1.74% after the centre-right Liberal National
Coalition pulled off a shock win in federal elections, beating
the centre-left Labor party. Elections also lifted markets in India. The benchmark BSE
index .BSESN rose 2.71% and the rupee INR=D4 strengthened
after exit polls showed Indian Prime Minister Narendra Modi is
likely to return to power with an even bigger majority in
parliament. U.S. S&P 500 e-mini futures ESc1 turned higher, rising
0.23% following losses on Wall Street on Friday.
"We've had such a volatile few days in terms of
pronouncements and interpretations of what's going on with this
potential trade war. And I think the news bites that we had over
the weekend seem to indicate a softening of Trump's approach
toward tariffs internationally," said Jim McCafferty, head of
equity research, Asia ex-Japan at Nomura.
The U.S. announced on Friday that it would remove tariffs on
Canadian steel and aluminium, prompting Canada's foreign
minister to vow the quick ratification of a new North American
trade agreement. "I think people might take the view that perhaps a similar
strategy might be applied to Asia," McCafferty said, referring
to the lifting of tariffs.
The cautious optimism failed to lift Chinese blue chips
.CSI300 , which fell 1%.
Japan's Nikkei stock index .N225 added 0.24%, after data
showed growth in the world's third-biggest economy unexpectedly
accelerated in the first quarter. Modest gains in Asia on Monday came even as financial
markets remained on edge over the intensifying Sino-U.S. trade
war, with the Trump administration last week adding Huawei
Technologies Co Ltd HWT.UL to a trade blacklist. The repercussions of that move were evident as Alphabet
Inc's GOOGL.O Google suspended business with Huawei that
requires the transfer of hardware, software and technical
services except those publicly available via open source
licensing.
Noting the festering trade war, Greg McKenna, strategist at
McKenna Macro, said investors are currently "headline trading"
given the continued uncertainty over Brexit and rising tensions
between the United States and Iran.
"(It's) too soon to see the economic consequences of the
battle escalating. And so belief can be suspended until that
time," McKenna said in a note to clients.
OIL JUMPS
Rising tensions in the Middle East, which have supported oil
prices, ratcheted up another notch on the weekend as Trump
issued new threats, tweeting that a conflict with Iran would be
the "official end" of that country. But it was comments from Saudi Arabia's energy minister that
had the most immediate effect on crude prices on Monday.
Saudi Energy Minister Khalid al-Falih said that there was
consensus among the members of the Organization of the Petroleum
Exporting Countries to maintain production cuts to "gently"
reduce inventories. Both U.S. crude CLc1 and Brent crude LCOc1 jumped more
than 1.3% on Monday, with West Texas Intermediate fetching
$63.58 a barrel and Brent crude at $73.19 per barrel.
In currency markets, China's offshore yuan CNH=D3
rebounded after touching its weakest against the dollar since
November on Friday. It was last trading at 6.9390 per dollar.
In onshore trading on Friday, the yuan weakened past the
psychologically important 6.9 per dollar level to end at its
softest in 19 weeks. However, sources told Reuters the country's
central bank is expected to use foreign exchange intervention
and monetary policy tools to stop it weakening past the
7-per-dollar level in the near term. The People's Bank of China said on Sunday that it would
maintain basic stability of the yuan exchange rate within a
"reasonable and balanced range." The onshore yuan CNY=CFXS strengthened to 6.9125 per
dollar on Monday.
The dollar added 0.08% against the yen to 110.16 JPY= ,
while the euro EUR= eased to $1.1152. The dollar index .DXY ,
which tracks the greenback against a basket of six major rivals,
was up a hair's breadth at 98.028.
The yield on benchmark 10-year Treasury notes US10YT=RR
rose to 2.4033% compared with a U.S. close of 2.393% on Friday,
while the two-year yield US2YT=RR touched 2.2146%, up from
Friday's U.S. close of 2.202%.
Gold trimmed earlier gains on the modest revival in risk
appetite, losing 0.1% to $1,275.91 per ounce. GOL/
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(Editing by Jacqueline Wong and Sam Holmes)