GLOBAL MARKETS-Asia wary of Fed rate outlook, high bond yields

* Asian stock markets : https://tmsnrt.rs/2zpUAr4 * Fed seen cutting 25bps, focus on future easing plans * BOE, BOJ and Norges seen on hold, Sweden to cut * Rising Treasury yields underpin dollar, pressure stocks By Wayne Cole SYDNEY, Dec 16 (Reuters) - Asian share markets were in a wary mood on Monday as surging bond yields challenged equity valuations, particularly for the richly priced tech sector, in a week packed with central bank meetings and major economic data. Interest rates are expected to fall in the United States and Sweden, and hold steady in Japan, the UK and Norway. The Federal Reserve will lead the pack on Wednesday with markets pricing a 96% probability it will cut rates by 25 basis points to a new range of 4.25% to 4.50%. 0#USDIRPR More important will be any guidance on future easing, including the "dot plot" forecasts of Fed members for rates over the next couple of years. "We look for the updated dots to signal a median expectation for three cuts next year, down from four in the September projection," said JPMorgan economist Michael Feroli. "The median longer-run dot, which was 2.875% in September, we see moving up to 3% or maybe even 3.125%." "That said, given the vagaries of trade and other policies next year, the signal from the dots may be even less useful than ordinarily." Investors have been steadily scaling back expectations of how far rates may fall, in part reflecting solid economic news and speculation President-elect Donald Trump's plans for tax cuts and tariffs would expand government borrowing while putting upward pressure on inflation. Futures imply only two more cuts next year and rates bottoming out around 3.80%, much higher than just a few months ago. That outlook took a heavy toll on the Treasury market last week, where longer-dated yields recorded their largest weekly rise this year. US/ Yields on 10-year notes US10YT=RR were up at 4.39%, having climbed 24 basis points last week alone, and threatening to breach a major bear target at 4.50%. Rising yields make bonds more attractive versus equities while lifting the level that future cash flows are discounted at and possibly the cost of capital for companies. Bitcoin grabbed the spotlight in early Asian trade on Monday, surging to a record high above $105,000 as it extended gains on bets Trump's return will usher in a cryptocurrency-friendly regulatory environment. S&P 500 futures ESc1 were a fraction lower on Monday, while Nasdaq futures NQc1 eased 0.1%. CHINA STRUGGLES MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was little changed, having been flat last week. Japan's Nikkei .N225 edged up 0.1%, while South Korea .KS11 bounced 0.7% on pledges of government support. China's blue chip index .CSI300 took a hit on Friday as investors awaited more detail on possible stimulus steps. Over the weekend, an official at China's central bank said it had room to further cut the reserve requirement ratio, though credit numbers out last week showed past easing had done little to boost borrowing. Figures on Chinese retail sales, industrial production and house prices for November are due out later Monday. A range of surveys on global manufacturing are also due Monday, while U.S. retail sales is due on Tuesday and a major inflation report on Friday. The Bank of Japan, Bank of England and Norges Bank are expected to stand pat on Thursday, while the Riksbank is seen cutting rates and perhaps by 50 basis points. In currency markets, the dollar has been underpinned by rising yields and put the squeeze on a raft of emerging market currencies, forcing intervention in some cases. The dollar likewise held firm on the yen at 153.53 JPY=EBS , having jumped almost 2.5% last week. The dollar index stood at 106.870 =USD , after rising 0.9% last week. The euro looked wobbly at $1.0508 EUR=EBS , not helped by news ratings agency Moody's unexpectedly downgraded France on Friday. The action came a few hours after French President Macron appointed veteran centrist Francois Bayrou as the country’s fourth premier in a year. Political uncertainty was also clouding South Korea where the finance ministry vowed to support markets after President Yoon Suk Yeol was impeached. A firm dollar combined with higher bond yields to restrain gold at $2,685 an ounce XAU= . GOL/ Bitcoin BTC= was having better luck, breaking above $105,000 for the first time and was last fetching $104,955. Oil prices were supported around three-week highs by expectations that additional sanctions on Russia and Iran could tighten supplies. O/R Brent LCOc1 was down 2 cents at $74.47 a barrel, while U.S. crude CLc1 eased 12 cents to $71.17 per barrel. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Wayne Cole Editing by Shri Navaratnam) (([email protected]; 612 9171 7144; Reuters Messaging: [email protected])) ((To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA ))