By Tom Westbrook
SINGAPORE, Jan 10 (Reuters) - Japanese stocks hit a near 34-year high on Wednesday while other Asian equities meandered around one-month lows and bond markets traded cautiously ahead of U.S. inflation data due this week.
Japan's Nikkei - which had its best year for a decade in 2023 - climbed 2% to break above 34,000 for the first time since 1990.
Exporters led the charge, helped by a softening yen. The broader Topix also hit its highest since 1990.
The rally contrasts with China, where the blue chip CSI300 slid to a five-year low and pulled MSCI's index of Asia-Pacific shares outside Japan down 0.7% to its lowest since mid-December.
Bitcoin steadied after spiking when an unauthorised post from the U.S. Securities and Exchange Commission's X account said it had approved bitcoin exchange-traded funds.
U.S. equity futures were steady. European futures and FTSE futures slipped 0.2%. Australian inflation came slightly cooler than expected and focus was on U.S. consumer price data due on Thursday.
Interest rate futures are pricing around 140 basis points of U.S. rate cuts this year, compared to the Federal Reserve's dot plot of 75 bps. The probability of a move as early as March has been pared somewhat to a still-high 64%, and will likely shift again depending on Thursday's report.
"Market pricing...has gotten a little bit ahead of itself," Jeff Klingelhofer, co-head of investments and managing director at Thornburg Investment Management, told journalists on an outlook call on Wednesday.
"If you look at history - five (25 bp) cuts is very consistent with a recession, but markets aren't pricing in a recession," he said. A lot ... of the assumptions for 2024 would be historically very not normal if we get that."
Forecasts are for core CPI to rise 0.3% in December, pulling annual inflation down to 3.8% and its lowest since mid-2021.
Geopolitical tensions were also on the radar as disruptions in the Red Sea and a production outage in Libya raised oil prices, and an election looms in Taiwan.
U.S. and UK forces shot down 21 drones and missiles fired by Yemen-based Houthis on Tuesday into the Southern Red Sea towards international shipping lanes, the U.S. military's Central Command said.
Brent crude futures rose 1.9% on Tuesday and were up 0.4% to $77.91 a barrel early on Wednesday.
Bitcoin was last down 0.1% at $46,000 after spiking as high as $47,897 on the false reports of ETF approvals.
DATA DEPENDENT
Trade in foreign exchange and fixed income markets was tentative ahead of the U.S. inflation report.