*

Asian stock markets : https://tmsnrt.rs/2zpUAr4

*

Nikkei dips, S&P futures quiet with Wall St off

*

China markets make modest gains on return from LNY holiday

*

Global bonds price for fewer, later rate cuts

*

Nvidia results to test limits of AI euphoria

(Updates prices, China stocks)

By Wayne Cole

SYDNEY, Feb 19 (Reuters) - Asian shares were off to a stuttering start on Monday as fading chances for early rate cuts globally soured the mood and Chinese markets returned from holiday with only muted gains.

A holiday for U.S. markets also made for thin trading, while the latest surge in tech stocks is set to be tested by results from AI diva Nvidia on Wednesday.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1%, after bouncing 2% last week.

Japan's Nikkei dipped 0.3%, having surged more than 4% last week to stop just short of its all-time high.

EUROSTOXX 50 futures also eased 0.3% and FTSE futures lost 0.2%.

Chinese blue chips inched up 0.3% and Shanghai stocks 0.7%. Investors have been hoping they could extend the 6% rally enjoyed before the break.

There was some promising news that tourism revenues during the Lunar New Year holiday surged by 47% on a year earlier as more than 61 million rail trips were taken.

The country's central bank skipped a chance to cut rates again on Sunday, which will likely limit downward pressure on the yuan, but with deflation looming analysts see plenty of scope for further policy stimulus.

The same cannot be said for the United States as high readings on producer and consumer prices saw markets sharply scale back pricing for rate cuts.

Bruce Kasman, global head of economics at JPMorgan, warned the Federal Reserve's favoured measure of core personal consumption inflation could now jump by 0.5% in January. Only a week ago, markets were hoping for a rise of just 0.2%.

"While it is premature to place significant weight on noisy January data, risks have shifted in the direction that core inflation and labour market conditions both surprise the Fed in a hawkish direction in the first half of 2024," Kasman wrote in a note.

"This stall has been expected to delay the start of the developed world easing cycle to midyear, and curb enthusiasm about the overall magnitude of the easing cycle ahead."

Futures have sunk to imply just a 28% chance rates will be cut in May, when it was considered a done deal a couple of weeks ago. Markets have taken out two quarter point rate cuts for this year to imply less than 100 basis points of easing.

HANGING ON NVIDIA

The surprise on inflation means the minutes of the Fed's last policy meeting out this week now look dated, but any talk about the timing of potential cuts will be noted.