* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Shock rise in U.S. CPI stirs fear of Fed tapering
* Nikkei hits lowest since early Jan, US stock futures
bounce
* Treasury yields, dollar pause after jump
* Bitcoin nurses losses after Tesla puts a hold on
acceptance
By Wayne Cole
SYDNEY, May 13 (Reuters) - Asian shares slipped to
seven-week lows on Thursday after a shocking rise in U.S.
inflation bludgeoned Wall Street and sent bond yields surging on
worries the Federal Reserve might have to move early on
tightening.
"Higher inflation is a definite negative for equities, given
the likely rates response," said Deutsche Bank macro strategist
Alan Ruskin.
"The more nominal GDP gains are dominated by higher
inflation, especially wage inflation, the more the possible
squeeze on profit margins. It plays to a more choppy, less
bullish equity bias."
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS lost 0.9%, though trade was thinned by holidays
in a number of countries.
Japan's Nikkei .N225 fell 2.0% and touched its lowest
since early January, while Chinese blue chips .CSI300 lost
0.9%.
Asian markets were already on the backfoot this week amid
inflation worries and a tech sell-off on Wall Street, and nerves
were further jangled on Wednesday when Taiwan stocks .TWII
tumbled on fears the island could face a partial lockdown amid
an outbreak of the virus. Nasdaq futures NQc1 were trying to rally with a gain of
0.4%, while S&P 500 futures ESc1 added 0.3%. But EUROSTOXX 50
futures STXEc1 were still catching up with overnight falls and
lost 0.7%, while FTSE futures FFIc1 shed 0.5%.
Wall Street was blindsided when data showed U.S. consumer
prices jumped by the most in nearly 12 years in April as booming
demand amid a reopening economy met supply constraints at home
and abroad. The jump was largely due to outsized increases in airfares,
used cars and lodging costs, which were all driven by the
pandemic and likely transitory.
Fed officials were quick to play down the impact of one
month's numbers, with vice chair Richard Clarida saying stimulus
would still be needed for "some time". "It likely would take a very strong May jobs report, with
sizable upward revisions to March and especially April, to get
the Fed to start a discussion about tapering at its June
meeting," said JPMorgan economist Michael S. Hanson.
"We continue to expect the Fed to begin scaling back its
pace of asset purchases early next year."
BLACK MARK FOR BITCOIN
Investors reacted by pricing in an 80% chance of a Fed rate
hike as early as December next year. Yields on 10-year Treasuries US10YT=TWEB steadied at
1.68%, having climbed 7 basis points overnight in the biggest
daily rise in two months. The yield curve also steepened
markedly to reflect the risk of rising inflation.
That was a shot in the arm for the dollar, which had been
buckling under the weight of rapidly expanding U.S. budget and
trade deficits. The euro retreated to $1.2078 EUR= , leaving
behind a 10-week peak at $1.2180.
The dollar stood at 109.66 yen JPY= , having hit a
five-week top of 109.78 and well off this week's low of 108.34.
The dollar index hovered at 90.737 =USD , up from a 10-week
trough of 89.979.
In cryptocurrencies, Bitcoin BTC=BTSP steadied after
sliding more than 10% when Elon Musk tweeted that Tesla Inc
TSLA.O has suspended the use of bitcoin to purchase its
vehicles. The rise in yields and the dollar pressured gold, which was
left at $1,818 an ounce XAU= and off a multiple-top around
$1,845. GOL/
Oil prices backed away from two-month highs, hit after U.S.
crude exports plunged and the International Energy Agency (IEA)
said demand was already outstripping supply. O/R
Brent LCOc1 was off 68 cents at $68.64 a barrel, while
U.S. crude CLc1 lost 68 cents to $65.40.
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(Editing by Sam Holmes & Shri Navaratnam)