GLOBAL MARKETS-Asia stocks soar as receding inflation worries bolster confidence

* South Korea, China lead Asian stock gains
* European stocks set to open higher
* U.S. CPI data showed underlying inflation muted
* Treasury yields slid after tepid 10-year auction

By Kevin Buckland and Matt Scuffham
TOKYO/NEW YORK, March 11 (Reuters) - Asian stocks extended
their rebound from a two-month low on Thursday after a report on
U.S. consumer prices calmed concerns about inflation and lifted
the Dow Jones Industrial Average to a record close.
An index of regional stocks excluding Japan .MIAPJ0000PUS
rose 1.7%, led by a 2.3% surge in South Korea's Kospi .KS11 ,
and was on track for its first three-day advance in three weeks.
China's Shanghai Composite .SSEC rallied 1.9%, helped by
strong local lending data, while Japan's Nikkei 225 .N225
gained 0.5%. E-mini futures for the U.S. S&P500 rose 0.5%
ESc1 .
Relative calm in the Treasuries market also helped risk
sentiment, with the benchmark yield settling at around 1.5%
after shooting to a one-year high above 1.6% last week as
investors worried about the U.S. economic recovery running too
hot.
"The market took a bit of relief from this consolidation in
rates," said Masahiko Loo, a Tokyo-based portfolio manager at
AllianceBernstein.
"The vaccine optimism is still there. People are coming back
into the workforce. If you add everything up -- and the bond
market is not being disruptive -- it's providing more incentive
for investors to buy equities."
Europe looked set to continue the global rally with Euro
Stoxx 50 futures STXEc1 0.2% higher after the index touched a
more than one-year top on Wednesday.
The European Central Bank sets its policy on Thursday and is
likely to signal faster money printing to keep a lid on
borrowing costs, although it will stop short of adding firepower
to its already aggressive pandemic-fighting package.
Britain's FTSE futures FFIc1 rose about 0.4%. MSCI's gauge
of stocks across the globe .MIWD00000PUS gained 0.28%.
The U.S. Labor Department said its consumer price index rose
0.4% in February, in line with expectations, after a 0.3%
increase in January. Core CPI, which excludes volatile food and
energy components, edged up 0.1%, just shy of the 0.2% estimate.
While analysts largely expect a hike in inflation as vaccine
rollouts lead to a reopening of the economy, worries persist
that additional stimulus in the form of a $1.9 trillion
coronavirus relief package set to be signed by U.S. President
Joe Biden could overheat the economy. Investors will now eye an auction of 30-year debt on
Thursday, seeking to cover massive shorts. A weak seven-year
auction in late February helped fuel inflation concerns and sent
yields higher. "Rises in U.S. bond yields appear to have subsided a bit
after the 10-year yield has reached 1.5%, even though many
investors remain cautious before the Fed's policy meeting," said
Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset
Management.
"The Fed has ratcheted up its rhetoric on bond yields
lately. The reality is, the economy is in a K-shaped recovery,
with the service sector still in difficult conditions and the
Fed would probably not want to let real interest rates rise."
The dollar remained weaker following the economic data.
The dollar index =USD was almost unchanged at 91.813,
following a 0.2% drop overnight.
The euro stood at $1.19265 EUR= while the safe-haven yen
eased to 108.685 per dollar JPY= .
Oil prices resumed their climb following two days of
declines, after the Energy Information Administration reported a
bigger-than-expected storage build. U.S. crude futures CLc1 stood at $64.97 per barrel, up 53
cents or 0.81%. Brent crude futures LCOc1 were at $68.45 per
barrel, up 55 cents or 0.8%.

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