In This Article:
By Tom Westbrook
SINGAPORE, Feb 27 (Reuters) - Asian shares struggled to advance on Tuesday, with slightly warmer-than-expected Japanese inflation putting investors on guard ahead of price data due in Europe and the U.S. this week.
The yen steadied at 150.57 to the dollar and inched off a three-month low on the euro as Japanese inflation stayed at the central bank's 2% year-on-year target, keeping alive expectations it would exit negative rates by April.
Tokyo's Nikkei crept 0.4% higher to eke a fresh record high. MSCI's broadest index of Asia-Pacific shares outside Japan was flat, keeping beneath last week's seven-month peak.
Wall Street indexes fell overnight and S&P 500 and Nasdaq futures nudged 0.1% lower in morning trade.
The Federal Reserve's favoured measure of inflation - the core personal consumption expenditures (PCE) price index - is due on Thursday and forecasts are for a rise of 0.4%.
"If as expected, the core m/m reading would be the highest since last February and fit with the patience message from the Fed," said analysts at ANZ Bank.
Rate jitters and enormous auctions - $127 billion on Tuesday and another $42 billion on Wednesday - left Treasuries under pressure, though yields steadied in the Asia morning.
Ten-year U.S. Treasury yields were last 2 basis points lower at 4.27%. Two-year yields fell four basis points to 4.70%.
Markets have already pushed out the likely timing of a first Federal Reserve easing from May to June, which is currently priced at around a 70% probability. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month.
On the geopolitical front, U.S. President Joe Biden said he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday as the warring parties appeared to close in on a deal.
Brent crude futures kept to recent ranges, rising 0.2% or 16 cents to $82.69 a barrel.
Figures on inflation in the European Union are also due this week, on Friday, with the core gauge again seen slowing to the lowest since early 2022 at 2.9% and bringing nearer the day when the European Central Bank (ECB) might ease policy.
Markets are almost fully priced for a first cut in June, with April seen as a 36% chance. In speeches on Monday, ECB President Christine Lagarde and Bank of Greece Governor Yannis Stournaras again pointed to a reticence to rush in to cuts .
Bank of England deputy Dave Ramsden and Riksbank Governor Erik Thedeen appear later on Tuesday while a smattering of mostly second-tier U.S. and European data are due including consumer confidence for Germany, France and the U.S.