* Global bond yields near previous peaks
* ECB rate hike talks lift euro, bond yields
* Oil prices hit 3 1/2-month lows
* Investors cautious ahead of Fed, Dutch election, G20
* European stocks seen dipping slightly
By Hideyuki Sano
TOKYO, March 13 (Reuters) - Asian shares rose on Monday, taking their cue from gains on Wall Street after strong U.S. job data, though the mood was cautious as oil prices plunged to 3 1/2-month lows on fresh worries of oversupply.
A confluence of major events this week including an expected interest rate hike by the U.S. Federal Reserve, a potentially divisive election in the Netherlands and a Group of 20 (G20) finance ministers’ meeting kept many investors on edge.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9 percent, while Japan’s Nikkei edged 0.2 percent higher, led by gains in defensive shares.
European shares are expected to open down slightly, with spread-betters looking at falls of 0.1 percent in Germany’s DAX and EuroStoxx50.
Global stocks rose on Friday, with the MSCI’s index of 46 markets gaining 0.5 percent, snapping six straight days of losses after the robust U.S. jobs report.
Solid February U.S. jobs data also made it all but certain that the Federal Reserve will raise rates on Wednesday.
“The markets are focusing on when the Fed will raise rates next time or the pace of its rate hike, so the tone of Fed Chair Janet Yellen will be closely watched,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
U.S. interest rate futures are pricing in about a 50 percent chance of another rate hike in June. By the end of 2017, a total of nearly three hikes were fully priced in, including the likely move this week.
In a Reuters poll of primary dealers, 12 out of 23 saw a rate increase to 1.00-1.25 percent by the June 13-14 meeting, while 10 expected such a move by the Fed’s September meeting.
The 10-year U.S. Treasuries yield slipped a tad on Friday, partly as markets had already expected robust payroll figures.
Still, it last stood at 2.574 percent, not far from its two-year high of 2.641 percent touched on Dec. 15.
U.S. junk bonds have also faltered, with iShares high yield corporate bond ETF last week posting its biggest weekly loss in more than a year.
Global bond prices also came under pressure following a report that some European Central Bank (ECB) policymakers had discussed the possibility of rate hikes before the end of its quantitative easing programme.
The 10-year German Bund yield rose to 0.496 percent on Friday, near its one-year high of 0.498 percent hit in January.
A break of those previous peaks in major bond yields could spark a fresh sell-off in global bond markets.
The talk of an ECB rate hike helped to lift the euro.
The single currency hit a one-month high of $1.0713 on Monday.
On the other hand, worries about the European project could resurface if Wednesday’s parliamentary election in the Netherlands will see the far-right gain more ground than expected.
Polls suggest the far-right ticket will double its vote and its results could affect investor perceptions’ on coming elections in France and Germany this year.
The dollar slipped 0.2 percent to 114.54 yen from Friday’s seven-week high of 115.51 yen after Commerce Secretary Wilbur Ross said on Friday that Japan will be high on the U.S. priority list for trade agreements.
Traders suspect Washington, keen to reduce its trade deficit, may put pressure on Japan not to cheapen the yen in upcoming bilateral economic talks.
“The G20 will be an important event for the dollar,” said Yoshinori Shigemi, Tokyo-based global market strategist at JPMorgan Asset Management.
“I had assumed, until last week, that the dollar would gain on a rise in U.S. rates. But if the G20 say something like they want to reduce trade imbalances, that could give rise to the speculation that they may not want a strong dollar,” he said.
G20 finance ministers and central bankers will meet in Germany on March 17-18, their first meeting attended by representatives of the administration of U.S. President Donald Trump.
A draft communique circulated last week showed they may no longer explicitly reject protectionism or competitive currency devaluations.
Oil skidded to 3 1/2-month lows after posting biggest three-day loss in a year by Friday on worries that OPEC-led production cuts have not yet reduced a global glut of crude as U.S. drillers kept adding rigs.
U.S. crude futures dropped 0.8 percent to $48.10 per barrel , having shed about 11 percent so far this month.
Elsewhere, the Indian rupee jumped 0.5 percent in non-deliverable forwards trading to one-year highs, after Prime Minister Narendra Modi’s party won a landslide election victory in the important battleground state of Uttar Pradesh.
Indian shares and bonds are expected to benefit when local financial markets reopen on Tuesday after a market holiday on Monday. (Editing by Kim Coghill and Richard Borsuk)