GLOBAL MARKETS-Asia stocks turn cautious on virus surge, geopolitics

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Nikkei ease 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
cautious turn on Wednesday as a resurgence of global coronavirus
cases challenged market confidence in a rapid economic recovery,
even as the rebound in U.S. retail sales in May broke all
records.
New infections have hit record highs in six U.S. states and
Beijing cut flights and closed schools to contain a fresh
outbreak in the Chinese capital.
"A serious second wave of cases in major developed countries
is the biggest risk facing equity markets," said Shane Oliver
head of investment strategy at fund manager AMP Capital.
"However, provided any second wave is relatively mild in
terms of pressure on health systems and the number of deaths,
its unlikely to reap the havoc seen back in March."
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 0.5%, 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.
Chinese blue chips .CSI300 slipped 0.4% and E-Mini futures
for the S&P 500 ESc1 0.2%. EUROSTOXX 50 futures STXEc1 and
FTSE futures FFIc1 both dithered either side of flat.
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. THE WORST
"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. All the talk of recovery caused headwinds for sovereign
bonds, though U.S. Treasuries did recoup some of the losses in
Asia.
Thirty-year yields US30YT=RR were last down two basis
points at 1.52%, having risen by the most in a month on Tuesday.
The U.S. dollar bounced modestly from recent three-month
lows to stand at 96.978 against a basket of currencies =USD .
The euro stood at $1.1268 EUR= from its recent top of
$1.1422, while the dollar was sidelined on the Japanese yen at
107.23 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 71 cents to $40.25 a
barrel, while U.S. crude CLc1 lost 94 cents to $37.44.

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(Editing by Lincoln Feast & Simon Cameron-Moore)