* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Chinese stocks drag other Asian markets lower
* China factory-gate prices fall sharply in Aug
* Markets on edge before ECB meeting
* German bund sell-off hits bonds in Asia
* Investors await more stimulus for global economy
By Stanley White
TOKYO, Sept 10 (Reuters) - Most Asian stocks swung lower on
Tuesday, weighed by Chinese markets after mainland factory-gate
prices shrank at their fastest pace in three years while reports
of German stimulus plans pushed global bond prices down.
China's producer price index fell 0.8% in August
year-on-year, official data showed on Tuesday, its sharpest
decline since August 2016 as flagging demand at home and abroad
forced some businesses to slash prices. The data pushed blue chip shares in China .CSI300 down
0.41%, which in turn drove an index of Asian stocks outside of
Japan .MIAPJ0000PUS 0.23% lower, having traded flat earlier in
the session.
That set the tone for early European trade with the
pan-region Euro Stoxx 50 futures STXEc1 down 0.09%, German DAX
futures FDXc1 off 0.12%, and FTSE futures FFIc1 0.09% lower.
"Globally inflationary pressure remains subdued, so in that
sense China is not an outlier," said Sean Darby, global equity
strategist at Jefferies in Hong Kong.
"People are positioned very bearish, but I don't think the
market wants to be too bearish. Bond yields are reversing.
Markets are a little more unsure about their expectations for
central banks, because a lot of easing is already priced in."
U.S. stock futures ESc1 were down 0.13% in Asia after the
S&P 500 .SPX ended flat in New York on Monday. Australian
shares .AXJO were down 0.71%. Bucking the trend, Japan's
Nikkei stock index .N225 rose 0.24%. .N .AX .T
Investor focus shifts to the European Central Bank, which is
widely expected to introduce a package of monetary easing and
stimulus measures on Thursday to offset the effects of an
ongoing U.S.-Sino trade war and a global economic slowdown.
The U.S. Federal Reserve is also widely expected to cut
interest rates next week as policymakers race to shield the
global economy from risks, which also include Britain's planned
exit from the European Union.
"Bond yields had fallen so far so fast that they were due
for a pullback, and you have some nerves setting in before the
ECB," said Shane Oliver, head of investment strategy and chief
economist at AMP Capital Investors in Sydney.
"The move in bond yields will affect share prices, but its
still uncertain how stocks will react. Over the next six months
sentiment around global growth will improve, but some of the
risks remain to be resolved."
Germany's 10-year Bund yield rose to a one-month high at
minus 0.565% DE10YT=RR , while longer-dated 30-year bond yields
DE30YT=RR closed at minus 0.036% on Monday.
Germany is considering setting up independent public
agencies that could take on new debt and invest in the economy,
three people familiar with talks about the plan told Reuters.
Europe's largest economy is teetering on the brink of
recession, but strict national spending rules have tied
policymakers hands on fiscal policy.
The sell-off in German debt pushed 10-year Treasury yields
US10YT=RR to a four-week high of 1.6489% in Asia on Tuesday.
The Treasury yield curve US2US10=TWEB steepened on Tuesday
as long-term yields traded above short-term yields in a sign of
receding concern about the economic outlook.
The rise in Treasury yields helped the dollar rise to a
five-week high of 107.50 yen JPY=EBS .
Last month the curve inverted for the first time since 2007
when long-term yields traded below short-term yields, which is a
widely accepted indicator of coming recession.
Yields on 10-year Japanese government bonds JP10YTN=JBTC
also rose to a four-week high of minus 0.220%.
Benchmark 10-year Australian government bond futures YTCc1
fell 5.5 ticks to 98.91, approaching a five-week low.
Elsewhere in currency markets, the pound GBP=D3 traded
near a six-week high of $1.2385 after a law came into force
demanding that Prime Minister Boris Johnson delay Britain's
departure from the European Union unless he can strike a divorce
deal. Oil futures hit their highest level in six weeks in Asia
after Saudi Arabia's new energy minister confirmed he would
stick with his country's policy of limiting crude output to
support prices. O/R
U.S. crude CLc1 rose to $58.39 a barrel, the highest since
July 31.
Prince Abdulaziz bin Salman, who became Saudi Arabia's new
energy minister on Sunday, told reporters there would be "no
radical" change in Saudi's oil policy. Saudi Arabia is OPEC's de
facto leader.
Yield Spreads Image https://tmsnrt.rs/2QgpV9Q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Lincoln Feast and Sam Holmes)