Asian stocks slip, euro hovers at 2-month peak amid global bond rout

TOKYO (Reuters) - Asian stocks slipped early on Thursday, taking a lead from weaker Wall Street, while a continuing rise in eurozone debt yields amid a global bond rout kept the euro hovering at a two-month peak versus the U.S. dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent. Australian shares shed 1.2 per cent and South Korea's Kospi also fell.

Tokyo's Nikkei lost 0.6 per cent in the first trading day of the week. Japanese financial markets were closed from Monday to Wednesday for public holidays.

U.S. stocks ended weaker on Wednesday after U.S. Federal Reserve Chair Janet Yellen warned of high share valuations, adding to anxiety about future interest rates.

Weak U.S. indicators also added to uncertainty regarding when the first rate hike by the Fed could take place. Data on Wednesday showed tepid private job gains and a second straight quarterly decline in productivity.

Shrinking hopes for an early rate hike -a tightening in June appears less and less likely -weighed on the dollar and helped its counterparts like the yen and euro.

The euro was steady at US$1.1344, not far from a two-month high of US$1.1371 struck overnight. The dollar stood little changed at 119.42 yen, pulling further away from this week's high of 120.51 struck on Tuesday.

The euro also continued to receive a steady boost from a surge in euro zone bond yields, notably on German Bunds, in light of an easing in deflation fears thanks to improving European data.

German 10-year bond yields hit four-month high of 0.595 per cent overnight. Just last month it had hit a record low of 0.05 per cent, when hopes were high that the European Central Bank's trillion euro bond buying quantitative easing programme would drive the yield into negative territory.

French, Dutch, Belgian and Austrian equivalent bond yields also scaled 2015 peaks on Wednesday.

The retreat in euro zone bonds has also weighed on U.S. Treasuries, pushing the 10-year note yield to a two-month high.

"The focus is on whether ECB officials will express concerns over the euro's rebound and weaker European stocks, and whether that would halt the rise in Bund yields," said Masafumi Yamamoto, senior strategist for Monex, Inc. in Tokyo. "The euro's bounce could stop if Bund yields steady, but without hints of further ECB easing it could be hard to keep the currency from rising again."

The pound was shaky against the buoyant euro. Investors were nervous ahead of Britain's election later in the day, which appears unlikely to give one party a majority.

Prime Minister David Cameron's Conservatives and Ed Miliband's opposition Labour Party have been neck and neck in opinion polls for months, indicating neither will win enough seats for an outright majority in the 650-seat parliament.

The euro climbed as far as 74.49 pence, reaching a high last seen in mid-February. It was last at 74.41 pence.

In commodities, U.S. crude slipped on profit taking following an overnight climb to 2015 peaks reached after a first drawdown in U.S. crude inventories since January.

U.S. crude was down 0.75 per cent at US$60.47 a barrel after reaching a five-month high of US$62.58 on Wednesday.