GLOBAL MARKETS-Asia markets rise on hopes of easing China tech crackdown

(Adds new quote, context, European futures)

By Scott Murdoch and Julie Zhu

HONG KONG, May 17 (Reuters) - Asian shares advanced on Tuesday, led by a jump in technology majors, as hopes grow for an easing of China's unprecedented regulatory crackdown on its once-freewheeling tech sector.

Market sentiment has also been bolstered as Shanghai achieved the long-awaited milestone of three straight days with no new COVID-19 cases outside quarantine zones, which could lead to the beginning of the lifting of restrictions.

European markets were set for a higher open with the pan-region Euro Stoxx 50 futures up 0.85%, German DAX futures rising 0.87% and FTSE futures gaining 0.45%. U.S. stock futures, the S&P 500 e-minis, were up 0.42%.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.5% on Tuesday, but the index is still down 6.4% so far this month. U.S. stocks ended the previous session with mild losses.

In Tokyo, the Nikkei rose 0.33% in afternoon trade, while in Australia the S&P/ASX200 index gained 0.25%.

Mainland China's CSI300 Index gained 0.95% while Hong Kong's Hang Seng Index was 2.35% higher, as tech firms listed in the city jumped more than 4% on hopes of Beijing's crackdown on the sector being relaxed.

Chinese Vice-Premier Liu He is scheduled to speak at a Tuesday meeting with tech executives that has been convened by the country's top political consultative body to promote the development of the digital economy, people familiar with the matter told Reuters.

The meeting, currently underway, is being closely watched for remarks by Liu and others for clues as to how far Chinese authorities will go in easing a regulatory crackdown since late 2020 on the previously high-flying tech sector.

"The meeting today has been widely interpreted by the market that the worst would be over for China's year-long, multi-pronged crackdown on its internet industry. This has led to the rise of several Hong Kong-listed tech companies," said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.

However, economic growth fears in the world's two largest economies have re-emerged following weak retail sales and factory production figures in China and disappointing U.S. manufacturing data..

Investors are also weighing the global inflationary impact of lockdowns in China to combat the coronavirus, which have halted factory production in areas across the country.

"One important way China's lockdowns could impact the rest of the world is through its impact on inflation. After all, inflation – and the central bank response – has been a stiff headwind for global bond and equity markets this year," Capital Economics wrote in a note to clients.

The New York Fed's Empire State manufacturing index published on Monday showed an abrupt fall during May and shipments fell at their fastest pace since the beginning of the pandemic.

In afternoon Asian trade, the yield on benchmark 10-year Treasury notes rose to 2.9203% compared with its U.S. close of 2.879% on Monday.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 2.6112% compared with a U.S. close of 2.568%.

"Markets currently price the Fed funds rate to be 53 basis points higher at the next meeting in June, and 200 basis points higher by year end," said Imre Speizer, Westpac's head of New Zealand strategy.

The U.S. dollar index, which tracks the greenback against a basket of currencies, was flat in Asian trade to be at 104.15.

The dollar rose 0.17% against the yen to 129.38, getting closer to its high this year of 131.34.

The European single currency was up 0.1% on the day at $1.044, having lost 0.96% in a month.

U.S. crude dipped 0.39% to $113.76 a barrel. Brent crude fell to $113.88 per barrel.

Gold was slightly higher. Spot gold was traded at $1,824.44 per ounce.

(Reporting by Scott Murdoch and Julie Zhu in Hong Kong; Editing by Lincoln Feast.)