GLOBAL MARKETS-Asia stocks given pause by virus surge, geopolitics

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Nikkei eases back after rally, S&P 500 futures dip
* Mood restrained by surge in virus cases, China/India spat
* Recovery hopes supported by jump in US retail sales

By Wayne Cole
SYDNEY, June 17 (Reuters) - Asian share markets took a
breather on Wednesday as a resurgence of coronavirus cases
challenged market confidence in a rapid economic recovery, even
as the rebound in U.S. retail sales in May broke all records.
Geopolitics also lurked as a worry with India reporting 20
of its soldiers had been killed in clashes with Chinese troops
at a disputed border site. North Korea rejected a South Korea offer to send special
envoys and vowed to send back troops to the border. It was enough to inject a note of caution into trading and
Japan's Nikkei .N225 eased 0.7%, after jumping almost 5% on
Tuesday for its biggest daily gain in three months.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS went flat, having climbed 2.8% the previous day,
with most markets across the region little changed.
E-Mini futures for the S&P 500 ESc1 dipped 0.2% and
EUROSTOXX 50 futures STXEc1 eased 0.1%.
That followed a robust session on Wall Street overnight. The
Dow .DJI ended Tuesday up 2.04%, while the S&P 500 .SPX
gained 1.90% and the Nasdaq .IXIC 1.75%.
Hopes for recovery had been bolstered by data showing U.S.
retail sales jumped by a record 17.7% in May, recovering more
than half the losses of the previous two months, though
industrial output still lagged. The Trump administration was also reportedly preparing an up
to $1 trillion infrastructure package, something that was
initially promised more than three years ago. "There is little doubt that the global economy bottomed in
April and is poised to post record-high growth rates over May
and June, strongly lifting 3Q GDP above its 2Q trough," wrote
economists at JPMorgan.
"But questions about the extent of lasting damage will have
to wait for a number of months before being resolved."
Federal Reserve Chair Jerome Powell cautioned that output
and employment would remain well short of their pre-pandemic
levels for a long time, so there was a "reasonable probability"
that more policy support would be needed. Sentiment got an added boost from news trial results showed
a cheap and widely used steroid reduced death rates among the
most severely ill COVID-19 patients. Yet the virus continues to spread as infections hit record
highs in six U.S. states, and Beijing struggled to contain a
fresh outbreak in the Chinese capital. All the talk of recovery took some of the shine off
sovereign bonds, with U.S. 30-year yields US30YT=RR up at
1.53% having risen by the most in a month on Tuesday.
That in turn helped the U.S. dollar bounce a modestly from
recent three-month lows to stand at 97.063 against a basket of
currencies =USD .
The euro eased back to $1.1266 EUR= from its recent top of
$1.1422, while the dollar was sidelined on the Japanese yen at
107.25 JPY= .
In commodity markets, gold was stuck at $1,725 XAU= and
well within the $1,670/$1,764 range of the past few weeks.
Oil prices were pulled back by an increase in U.S. crude
inventories, having climbed 3% on Tuesday after the
International Energy Agency (IEA) raised its oil demand forecast
for 2020. O/R
Brent crude futures LCOc1 slipped 59 cents to $40.37 a
barrel, while U.S. crude CLc1 lost 72 cents to $38.38.

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(Editing by Lincoln Feast.)