* Soft U.S. retail sales and CPI dent optimism on U.S.
* Futures pricing in less than 50 pct chance of June Fed
* China Q1 6.9 pct growth tops f'casts, but little market
* U.S. Treasury avoids naming China as currency manipulator
* Gold hits 5-month high on geopolitical concerns
By Hideyuki Sano
TOKYO, April 17 Shares and the U.S. dollar
dipped on Monday while U.S. bond yields slumped to five-month
lows after soft U.S. economic data hurt investor sentiment
already frayed by worries over North Korea and coming French
That dwarfed any relief for market players after the U.S.
Treasury department did not name China as a currency
manipulator, avoiding an all-out confrontation on currencies
between the world's two largest economies.
S&P 500 mini futures declined 0.15 percent to 2,324,
edging near a six-week low of 2,317.75 touched in late March
following U.S. President Donald Trump's defeat on healthcare
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.1 percent in holiday-thinned trade, while
Japan's Nikkei fell as much as 0.6 pct to hit a
five-month low before ending up 0.1 percent.
Most European share markets will be closed for Easter
A raft of Chinese economic data beat market expectations but
did not produce notable market reactions as investors had been
already optimistic following a recent string of positive China
China's economy grew 6.9 percent in the first quarter from a
year earlier, a tad above economists' forecast of 6.8 percent.
However, mainland Chinese shares fell, with Shanghai
Composite Index down 1.0 percent at 3,212, risking a
close below its 60-day average at 3,216, seen as an important
support by investors and weighed by warning from top securities
regulator to combat market misbehaviour.
U.S. retail sales dropped more than expected in March while
annual core inflation slowed to 2.0 percent, the smallest
advance since November 2015, from 2.2 percent in February, data
showed on Friday.
That helped to drive down the 10-year U.S. Treasuries yield
to 2.200 percent, its lowest level since
mid-November from around 2.228 percent on Thursday before a
market holiday on Friday.
The yield had risen above 2.6 percent in December and again
in March, from around 1.85 percent before the U.S. presidential
election, on expectations of Trump's stimulus.
But growing perception that Trump will struggle to push any
tax cuts and fiscal spending programmes through the Congress has
prompted unwinding of the "Trump" trade.
"At the moment, it is hard to see any factors that could
drive up bond yields," said Hiroko Iwaki, senior strategist at
"And compared to U.S. bond yields, which have given up much
of their gains after the election, U.S. share prices, having
gone through a limited correction, look vulnerable given
potential developments in North Korea or the French election,"
Fed fund futures rose in price, now pricing less
than a 50 percent chance of a rate hike in its June 13-14
meeting for the first time in about a month.
Trump's administration declined to name any major trading
partner as a currency manipulator in a highly anticipated report
on Friday, backing away from a key Trump campaign promise to
slap such a label on China.
"Concerns about U.S.-Sino trade frictions have eased for the
time being," said Naoki Tashiro, the president of TS China
"But this is also thought to be a part of a barter, namely
the U.S. wants China to take tougher actions against North Korea
in exchange," he said.
There is no sign of easing in tensions over North Korea's
nuclear and missile programme after the reclusive country's
failed missile test on Sunday.
Trump's national security adviser said on Sunday that the
United States, its allies and China are working together on a
range of responses to North Korea.
"In essence, North Korea made a provocation that would not
transcend the U.S. 'red line'. But depending on how China will
react, Trump could lose his patience," said Makoto Noji, senior
strategist at SMBC Nikko Securities.
Safe-haven gold gained as much as 0.8 percent to hit a
five-month high of $1,295.5 per ounce on continued
concerns on tensions over North Korea.
The dollar slipped to as low as 108.13 yen, a
five-month low and 0.4 percent below its late U.S. levels.
The semi-annual U.S. Treasury currency report maintained the
six countries on a "monitoring list" -- China, Japan, Germany,
South Korea, Taiwan and Switzerland -- suggesting Washington
could put more pressure on those countries to take steps to
reduce their trade surplus with the United States in future.
The euro stood at $1.0622, little moved so far, and
not far from a one-month low of $1.0570 touched last Monday,
with focus on the French presidential election.
Ahead of the first round of voting on April 23, the race
looked tighter. Two polls put any of the four frontrunners,
including far-right candidate Marine Le Pen and hard-left
challenger Jean-Luc Melenchon, within reach of a two-person
The Turkish lira jumped about 2.5 percent to
3.6300 per dollar versus 3.7220 on Friday after President Tayyip
Erdogan snatched a victory in a referendum to grant him sweeping
powers in the biggest overhaul of modern Turkish politics.
It last traded at 3.677.
Oil prices slipped on signs the United States is continuing
to add output, undermining OPEC efforts to support prices.
Benchmark Brent crude futures were down 1.0 percent
at $55.34 a barrel.
(Editing by Kim Coghill and Richard Borsuk)