* U.S. futures down 0.5 pct after NYT report on Trump
* Trump reportedly asked Comey to end investigation
* Dollar index erases almost all post-election gains
* Oil falls 1 pct on U.S. inventory data
* European shares seen falling 0.2-0.6 pct
By Hideyuki Sano
TOKYO, May 17 (Reuters) - U.S. share futures and the dollar tumbled on Wednesday on worries about more U.S. political turmoil after media reports said President Donald Trump asked then-FBI Director James Comey to end a probe into Trump’s former national security advisor.
The reports raised questions over whether obstruction of justice charges could be laid against Trump, weakening confidence in the U.S. president’s ability to push through an aggressive stimulus programme that investors had been banking on since his election in November.
S&P 500 mini futures, the world’s most liquid stock futures, dropped 0.5 percent to 2,385, though they have managed to hold above their recent lows around 2,379.
European shares are expected to open lower, with spread-betters looking at declines of 0.6 percent for Germany’s DAX, 0.4 percent in France’s CAC and 0.2 percent for Britain’s FTSE.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent while Japan’s Nikkei shed 0.5 percent.
Mike O‘Rourke, chief market strategist at Jones Trading, wrote in a note that “Rising doubts about U.S. political leadership should fuel further rotation into Europe. The situation remains fluid, but this development should finally break the financial markets out of the volatility vacuum.”
Nobuhiko Kuramochi, chief strategist at Mizuho Securities, said “worries about European politics and North Korea have receded... But now we have worries about the Trump Administration. Given that there are some stock indexes that have risen more than 10 percent so far this year, we may be entering a consolidation phase.”
Trump asked Comey to end the FBI investigation into ties between former White House national security advisor Michael Flynn and Russia, according to a source who has seen a memo written by Comey.
The news, first reported by the New York Times, came after Trump had fired Comey and then discussed classified national security information about Islamic State with Russian Foreign Minister Sergei Lavrov.
The White House quickly denied the New York Times report, saying in a statement it was “not a truthful or accurate portrayal of the conversation between the president and Mr. Comey.”
The tumult at the White House prompted currency traders to ditch the dollar against a broad range of currencies, most notably against the yen, to which investors often turn as a safe haven when there are problems in Europe and the United States.
The dollar dropped 0.7 percent to 112.37 yen, slipping further from its highs near 114.40 yen touched last week.
The dollar’s index against a basket of six major currencies dropped to 97.93, giving up all of the gains made after Trump’s election victory in November.
Other traditional safe-haven assets were also well bid. The Swiss franc gained 0.3 percent against the dollar to 0.9828 franc per dollar. The gold rose 0.6 percent to $1,243.4 per ounce.
The euro hit a six-month high of $1.1117, as it also drew support from solid economic data in the euro zone.
The euro zone’s GDP grew 0.5 percent in January-March, in line with expectations, and underscoring a recovery in the currency bloc.
On the other hand, U.S. economic data published on Tuesday was mixed, raising more doubts about some rosy views on the economy.
While U.S. manufacturing production recorded its biggest increase in more than three years in April, housing starts posted a surprise fall to five-month lows.
The data came after Friday’s softer-than-expected retail sales and inflation.
“Until Friday, markets had been focusing only on the bright side of the U.S. economy. But that seems to have changed,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
The 10-year U.S. Treasuries yield dipped to 2.294 percent, flirting with its lowest level in two weeks.
Oil prices dropped after data showed an increase in U.S. crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russia to extend output cuts.
Brent crude futures were at $51.28 per barrel, down 36 cents, or 0.7 percent, from their last close. (Reporting by Hideyuki Sano; Editing by Eric Meijer and Richard Borsuk)