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GLOBAL MARKETS-Asian stocks edge higher, led by rally in commodities

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Anshuman Daga and Echo Wang
·3 min read
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* Crude oil, metal prices gain on growth outlook

* Expectations of faster growth spur inflation fears

* High-flying tech shares tumble in rotation shift

By Anshuman Daga and Echo Wang

SINGAPORE/MIAMI, Feb 23 (Reuters) - Asian stocks reboundedfrom two-week lows struck on Tuesday as rising commodity pricesboosted market expectations of an improved growth outlook, a dayafter rising U.S. Treasury yields and inflation prospects hitU.S. tech shares.

MSCI's broadest index of Asia-Pacific shares outside Japanticked up 0.2% after dipping to 719.8, thelowest level in two weeks. The gauge has eased from last week'srecord top but is still up just over 9% so far this year.

The Australian S&P/ASX 200 and Singapore's StraitsTimes index both gained 0.6% and Hong Kongadvanced 1.1%. The tech-laden South Korea's Kospi was aprominent loser, down 0.3% and Taiwan eased 0.05%.

Japanese markets were closed for a public holiday.

"A higher interest rate environment forces investors toconsider the opportunity costs of investments. Stocks that havesignificant borrowing, or produce no income for investors, maybe particularly vulnerable," said Michael McCarthy, chief marketstrategist at broker CMC Markets in Sydney.

On Wall Street, high-growth stocks such as Apple,Microsoft and Tesla weighed on the NasdaqComposite, which shed 2.5% on Monday.

Commodity prices again strengthened on Tuesday. Oil pricesrose on a tight global supply outlook after U.S. production washammered by frigid weather and an approaching meeting of topcrude producers is expected to keep output largely in check.

Brent crude was up 2.2% at $66.7, a one-year high.Spot gold rose to a one-week high to $1,815.3 an ounce asinflation worries boosted the bullion's appeal as a hedge.

The strength in commodities kept the Australian dollarsteady at $0.79 against the U.S. dollar, just near athree-year high.

Bond yields have risen sharply this month as prospects ofmore U.S. fiscal stimulus boosted hopes for a faster economicrecovery globally. However that is also fuelling inflationworries, prompting investors to sell growth stocks that haverallied in recent months.

"Real U.S. interest rates are now in positive territory,which has created some concern around the consequences forequities markets," Cesar Perez Ruiz, chief investment officer atPictet Wealth Management said in a report.

The dollar index was steady at 90.028, with the euroup 0.090% at $1.2165. The Japanese yen was littlechanged versus the greenback at 105.01 per dollar.

Cash Treasuries were not traded in Asia with Tokyo shut forholidays, but futures firmed slightly and showed an impliedten-year Treasury yield of 1.34%.

Markets will turn their focus to Federal Reserve ChairJerome Powell who is delivering his semi-annual testimony onTuesday. Powell is likely to reiterate a commitment to keepingpolicy super easy for as long as needed to drive inflationhigher, analysts said.

"In addition to the ever-present question of what it maytake for the Fed to consider tapering, the most pressinginvestor interest is at what point the Fed could respond to thelevel or volatility of interest rates after the recentincreases," foreign exchange strategist at Citi said in a note.

(Reporting by Anshuman Daga in Singapore and Echo Wang inMiami; Editing by Sam Holmes and Ana Nicolaci da Costa)