GLOBAL MARKETS-Asia stocks sedate, dollar steady as inflation tests await

(Updates as of 0520 GMT) By Ankur Banerjee SINGAPORE, May 31 (Reuters) - Asian stocks inched higher on Friday, while the dollar was steady, keeping the pressure on the yen, as investors await inflation readings from Europe and the U.S. that will likely dictate the path of interest rates globally. A downward revision to consumer spending meant the U.S. economy grew more slowly than expected in the first quarter, data showed on Thursday, weighing on Treasury yields and the dollar. FRX/ US/ The revised GDP data also stoked expectations that the Federal Reserve has scope to cut rates this year, with market pricing putting a September cut at a coin toss, CME FedWatch tool showed. For the year, traders are pricing in 35 basis points of easing. Financial markets have been biding their time for the main data event of the week - Friday's April report on U.S. core personal consumption expenditures (PCE) price index, which is the Fed's preferred inflation gauge. Inflation report from the euro zone is also due on Friday. Ben Bennett, Asia-Pacific investment strategist at Legal And General Investment Management, said the PCE reading should not provide much of a surprise. "But investors will still be very sensitive to even small misses," he said. The shifting expectations over interest rates has kept the markets on edge, with European stock markets set for a subdued open. Eurostoxx 50 futures STXEc1 was down 0.04% and FTSE futures FFIc1 was flat. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.20%, pushing away from the three-week low hit on Thursday. Analysts said month-end rebalancing by fund managers helped lift equities in the region. The index was set for a gain of 2.7% in May, rising for the fourth straight month. China stocks also rose, with the blue-chip index .CSI300 up 0.20% while Hong Kong's Hang Seng index .HSI gaining 1%. The upturn in China's markets came even as the nation's manufacturing activity unexpectedly fell in May, an official factory survey showed on Friday. The soft outcome kept alive calls for fresh stimulus as a protracted property crisis continues to weigh on businesses, consumers and investors. Meanwhile, markets have so far shrugged of the Donald Trump verdict after he became the first U.S. president to be convicted of a crime on Thursday. Traders are also looking over their shoulders for any hints of intervention from the Tokyo authorities as the Japanese yen JPY=EBS flirts with levels that led to suspected bouts of intervention late in April and early this month. The yen was last at 156.80 per dollar, having touched four-week lows of 157.715 on Wednesday. The currency weakened to its lowest in 34 years at 160.245 on April 29, sparking at least two suspected rounds of interventions. Data on Friday showed core consumer prices in Japan's capital rose 1.9% in May on rising electricity bills but price growth excluding the effect of fuel eased, heightening uncertainty on the timing of the central bank's next interest rate hike. The dollar index =USD , which measures the U.S. currency against six rivals, was at 104.82, on course for 1.4% decline in May, snapping a four-month winning streak. The euro EUR=EBS eased 0.12% to $1.08192 ahead of euro zone inflation data for May that is set to influence the European Central Bank's policy path. The central bank is all but certain to cut rates in June but what comes after that remains uncertain. Markets are pricing 60 basis points of ECB cuts this year. In commodities, oil prices eased after a surprise build in U.S. gasoline stocks weighed on the market. Brent LCOc1 futures was down 0.28% at $81.63 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 was down 0.35% at $77.64. O/R <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates YTD http://tmsnrt.rs/2egbfVh Asian stock markets https://tmsnrt.rs/2zpUAr4 Asian stocks YTD performance vs peers https://tmsnrt.rs/3V6Wllo ECB all but certain to cut rates for first time since 2019 https://reut.rs/3x3Oey3 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam and Stephen Coates) (([email protected];; Mobile - +65 8121 3925; Follow on X (formerly Twitter): @AnkurBanerjee17;)) ((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 ))