* U.S. stock futures down 0.2 pct, Nikkei down 0.3 pct
* Oil prices slip on doubts on production cut deal this week
* U.S. bond yields, dollar slip from highs
* Battered emerging markets win reprieve
* European shares
By Hideyuki Sano
TOKYO, Nov 28 The dollar and U.S. bond yields
fell on Monday as investors reversed a "Trumpflation" trade that
has gripped markets since the U.S. elections, after oil prices
slid on fears that producer countries meeting this week could
fail to agree an output cut.
Brent crude futures last traded at $47.13 per barrel
, down slightly on the day, after having fallen by as
much as 2.0 percent in early Asian trade, following on from a
3.6 percent fall on Friday as doubts arose over whether the
Organization of the Petroleum Exporting Countries would reach a
deal later this week.
Prospects of reduced upward pressure on inflation from oil
prices, prompted investors to temper expectations for rises in
U.S. interest rates, bring down treasury yields and the dollar.
That gave some relief to Asian shares, which had
underperformed on worries about capital flight to
higher-yielding U.S markets in the weeks since Donald Trump's
Nov.8 election win.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.6 percent, led by gains in Hong Kong
In contrast, U.S. stock futures slipped 0.2 percent
after their stellar performance this month on hopes
President-elect Trump's policy of fiscal spending, deregulation
and protection of domestic industries will boost U.S. inflation
and benefit Corporate America.
European shares are expected to dip, with spread-betters
looking at a fall of 0.2 percent in Germany's DAX and
0.1 percent in Britain's FTSE.
Japan's Nikkei average, which had performed even
better than Wall Street thanks to the yen's fall, ended down 0.1
"It will be scary to think markets may fully reverse their
moves since the elections, changing their mind that Trump's
policy may not be so good after all," said Bart Wakabayashi,
head of Hong Kong FX sales at State Street Global Markets.
Wall Street's four main indexes
all hit record highs last week, a feat last achieved in 1999.
Yet some investors question whether the market may have got
carried away with optimism on Trump's policy, given the
uncertainty on the political neophyte's presidency, including on
how closely he can work together with the Congress.
But languishing oil prices, giving investors a more
immediate reason to have second thoughts about how prospects for
inflation and U.S. interest rates.
Saudi Arabia said on Friday it will not attend talks on
Monday with non-OPEC producers to discuss supply
"Oil prices have fallen considerably on worries about the
deal. That would pressure energy shares, and could hit the
entire stock markets. Given their rally in recent days, it's no
surprise to see some adjustment," said Masahiro Ichikawa, senior
strategist at Sumitomo Mitsui Asset Management.
Saudi Arabia's energy minister Khalid al-Falih said on
Sunday that he believed the oil market would balance itself in
2017 even if producers did not intervene, and that keeping
output at current levels could therefore be justified.
His comments raised worries that a preliminary agreement
reached in September for OPEC to reduce output to between 32.5
million and 33 million barrels per day may fall apart when
OPEC ministers meet on Wednesday to finalise that deal.
OPEC also wants non-OPEC producers such as Russia to support
the intervention by curbing their output and many market players
still expect them to reach a deal.
As lower oil prices reduce inflationary pressure, they
sapped momentum for a sell-off in U.S. Treasuries and a rally in
the dollar, the market's favourite play since the U.S. election.
The dollar sank more than 1.6 percent against the yen to as
low as 111.355 yen, down sharply from its eight-month
high of 113.90 set just on Friday. It last traded at 111.90 yen.
"As long as the dollar holds above 111-111.50 yen, I do not
judge the (dollar's rising) trend has changed," said Koichi
Yoshikawa, executive director of financial markets at Standard
Chartered in Tokyo.
The dollar's index against a basket of six major currencies
stood at 100.88, slipping 0.6 percent on day and
off its 13 1/2-year high of 102.05 touched on Thursday.
The dollar shed more than 0.5 percent against many emerging
market currencies, including the Mexico peso, the biggest
loser after Trump's election victory, the South African rand
and the Turkish lira.
The euro gained 0.8 percent to $1.0655, extending its
rebound from its near one-year low of $1.0518 touched on
The single currency has so far shown limited reaction to the
French conservatives' presidential primaries on Sunday.
Former Prime Minister Francois Fillon, a socially
conservative free-marketeer, won the run-off, setting up a
likely showdown next year with far-right leader Marine Le Pen
that the pollsters expect him to win.
Gold bounced back to $1,192.0 per ounce from Friday's
low $1,171.5, which was its lowest level since early February.
The yield on 10-year U.S. Treasuries dropped
almost 5 basis points to 2.323 percent, off its 16-month high of
2.417 percent touched on Thursday.
On the other hand, some commodities gained sharply on hopes
of strong demand for property and infrastructure investment in
China and the United States.
Chinese steel futures jumped over 6 percent, while
iron ore futures also gained about six percent and
zinc, used to galvanise steel, powered to a nine-year
high on the London Metal Exchange.
(Editing by Simon Cameron-Moore)