Asian markets struggle to keep US gains

SINGAPORE -- Asia's stock markets struggled to carry recent gains into a fourth consecutive session on Wednesday and the US dollar steadied, as doubts about inflation and the drag from rate rises crept back into the global growth outlook.

MSCI's broadest index of Asia-Pacific shares outside Japan gave up earlier gains to trade around flat by mid-morning. Japan's Nikkei rose 0.3 percent, while miners helped Australian shares rise by 0.7 percent.

Overnight Wall Street indexes had jumped and the dollar recoiled from near two-decade highs as investors pushed worries about inflation and recession to the back of their minds.

Analysts doubted it would last and by the time Asian traders had realized that US stocks had run out of steam, analysts doubted it would last. S&P 500 futures were down 0.2 percent early in the Asia session, while Nasdaq futures were down 0.4 percent.

After plunging into last week, shares could have a longer near-term bounce, said Shane Oliver, chief economist and head of investment strategy at Australia's AMP Capital.

The dollar was stronger after an overnight kicking, helped by Australian wages data missing forecasts that pulled down the Aussie dollar.

The dollar settled on the euro at $1.0536 and paused a strong bounce for sterling at $1.2480. The dollar index was at 103.370.

It's still too early to call for a long term peak in the dollar and retracements should be shallow, according to analysts at Westpac. They said that a two-way consolidation between 102 -- 104 is likely to be near-term.

The short-term mood was helped by positive data with US retail sales meeting forecasts for a solid increase in April and industrial production beating expectations.

On Wednesday, Japan's quarterly data showed that it was smaller than expected by traders.

The reminder from Federal Reserve Chair Jerome Powell that controlling inflation would cause inflation to rise and cause some pain, however, was offset by the good news.

The benchmark Fed funds rate is expected to decline 3 percent by early next year, and investors have priced in 50 basis point US rate hikes in June and July.

The yield between short-dated bonds and long-dated bonds is narrowing as markets price in the risk that rate hikes this year will drag on longer-run growth.

The yield was just below 3 percent at 2.9805 and the benchmark 10 year Treasuries were steady in Asia.

European yields are rising as the likelihood of the European Central Bank hiking rates by 25 basis points around July is firm. Klaas Knot, the Dutch central bank chief, said overnight that a bigger rise shouldn't be ruled out.

Commodities rallied with stocks this week because markets had found reasons to hold out of growth hopes, but oil dipped overnight and there were signs of waning momentum on Wednesday.

The US crude futures rose by 0.8 percent to $113.35 a barrel, up 0.3 percent at $112.29 a barrel.