* Markets wager on policy stimulus as economic news disappoints

* Bond prices rally globally, German yields turn negative

* Sterling slugged as BoE changes tack on rates

By Wayne Cole

SYDNEY, Aug 14 (Reuters) - Asian shares pushed higher on Thursday after a flood of soft economic data led investors to wager on a ceaseless fountain of stimulus from major central banks, sending bond yields tumbling across the globe.

An economic contraction in Japan, a shock fall in Chinese loans, a surprisingly dovish turn by the Bank of England and a sluggish reading on U.S. retail sales all combined to make any tightening in policy seem a very distant prospect.

Indeed, investors suspect further easing is in the cards with data on euro zone growth and inflation later Thursday expected to pressure the European Central Bank for more action.

Yields on Germany's two-year debt actually went negative, meaning investors were paying for the privilege of lending Berlin money.

"Risk-correlated assets have responded positively to weak activity data in the U.S., China, the euro area and Japan," summed up Barclays forex strategist Aroop Chatterje. "Euro area inflation remains subdued, which could put pressure on the ECB."

But it is hardly alone.

"China's growth recovery remains fragile," he added. "More forceful policy easing such as interest rate cuts is likely needed for the government to achieve its growth target."

The Bank of Korea on Thursday cut its rates by a quarter point to 2.25 percent, the lowest since early November 2010.

The shift came after new Finance Minister Choi Kyung-hwan last month launched a series of stimulus measures to prop up faltering growth.

The thought of endless largesse helped take the sting out of the disappointing economic news and underpinned equities.

Japan's Topix rose 0.5 percent, while the Australian market added 0.7 percent. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent.

On Wall Street the Dow ended Wednesday 0.55 percent firmer, while the S&P 500 added 0.67 percent and the Nasdaq 1.02 percent.

Brazil was one of the few markets to lose ground as news that presidential candidate Eduardo Campos was killed in a plane crash knocked the Bovespa index down 1.5 percent.

NO HIKES HERE

Bond investors were also enticed by the outlook for easy money as subdued U.S. retail sales led markets to again push back the day when the Federal Reserve might first raise rates.

Fed fund futures for June next year closed at their highest in over two months at 99.75, implying a rate of just 0.25 percent.

Two-year U.S. Treasury yields dived to their lowest close in nine weeks at 0.4159 percent, rallying from a top of 0.59 percent in just 10 sessions.