Asian shares struggle after data raises more questions on US economy

TOKYO (Reuters) - Asian shares struggled on Monday after soft data raised more questions about the health of the U.S. economy.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed while Japan's Nikkei share average edged up just 0.1 per cent, despite stronger-than-expected orders.

U.S. industrial production unexpectedly fell for a fifth straight month in April while consumer confidence dropped to a seven-month low in early May, data showed on Friday, pushing down the dollar and U.S. bond yields.

Coming on the heels of weak retail sales and producer inflation data, the reports stoked concerns that the U.S. economy is hardly gaining momentum after disappointing 0.2 per cent annualised growth in January-March.

"U.S. GDP will likely be revised down in the next update to show a contraction. We estimate the U.S. economy shrank 0.9 percent," said Shuji Shirota, head of macro economics strategy group at HSBC in Tokyo.

The weakness also cemented expectations that the Federal Reserve will probably not raise interest rates anytime soon, with U.S. interest rate futures pricing a rate hike near the end of 2015.

The 10-year U.S. Treasuries yield fell almost 10 basis points to 2.140 per cent on Friday, compared to six-month high of 2.366 per cent set on Tuesday.

The dollar index stood at 93.230, just above four-month low of 93.133 hit on Thursday.

The euro held firm, trading at US$1.1442, near three-month high of US$1.1468 hit on Friday.

The euro has been also helped by recent jumps in euro zone debt yields, which make euro zone bonds more attractive for investors and could increase demand for the euro.

The yen was little changed at 119.27 to the dollar, while sterling was off Thursday's six-month high of US$1.5815, changing hands at US$1.5733.

The New Zealand dollar fell 0.4 per cent to US$0.7443 after the government announced on Sunday a new capital gains tax on residential property investments to cool soaring prices in Auckland. The move raised speculation that the central bank could cut interest rates in coming months.

Oil prices are little changed with Brent futures standing at US$66.84 per barrel.

The market showed no initial response to news that Islamic State took the full control of the Western Iraqi city of Ramadi in the biggest defeat for the Baghdad government since last summer.