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GLOBAL MARKETS-Asian stocks extend global rally to 7th day, U.S. stimulus in focus

* Strong U.S. data lifts outlook for global pandemic recovery

* Japan leads regional advance as world index nears record high

* Value shares in favour as higher bond yields hurt tech

* Oil extends gains as economy outweighs Iran supply concerns

TOKYO, May 28 (Reuters) - Asian stocks put global equities on course for a seventh day of gains on Friday as investors bet the U.S. will lead the world out of the COVID-19 pandemic, with the focus turning to a multi-trillion dollar spending boost by the Biden administration.

Tokyo led the advance, with the Nikkei jumping 1.9% early in the session. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3%, hitting its highest level this month, though Chinese blue chips slipped 0.1% just after the open.

The MSCI world equity index added 0.1% to 709.71, nearing the all-time closing high of 710.36 set on May 7.

U.S. stocks were also poised for further gains after the S&P 500’s 0.1% rise overnight, with futures pointing to a 0.3% increase at the open.

On Thursday, data showed the number of Americans filing new claims for unemployment benefits dropped to the lowest since mid-March 2020, with companies desperate for workers to meet surging demand unleashed by a rapidly reopening economy.

A separate report confirmed a 6.4% acceleration in the annualised rate of economic growth last quarter, bolstered by massive fiscal stimulus.

The New York Times reported that President Joe Biden will seek $6 trillion in federal spending for the 2022 fiscal year, a day before the White House is expected to unveil its budget proposal.

Although the scale of fiscal stimulus has stoked worries about an inflation spike forcing the Federal Reserve to act faster to taper asset purchases and tighten lending rates, more spending is good for world growth and global equities and has buoyed investor sentiment, said Kyle Rodda, a market analyst at IG in Melbourne.

“This is a market that’s blown off a little bit of froth over the last three weeks, but there’s nothing that’s occurred to suggest that the bull market in stocks is under any imminent threat,” he said.

“Maybe momentum has slowed down, and that could remain the case for a little while, but the bull market is still pretty strong.”

A test of the runaway inflation thesis comes later Friday with the release of a report closely watched by U.S. central bankers: core personal consumption expenditures.

This week, multiple Fed officials have come out again to calm those jitters amid growing evidence of price pressures, though they also signalled a possible start to talks to taper stimulus.

The Fed’s vice chair for supervision, Randal Quarles, said on Thursday that he was “fully committed” to keeping monetary policy running full-throttle while jobs recover, while laying out the case that “upside” risks to inflation may be mounting.

Positive signals on the economy helped lift benchmark Treasury yields back above 1.6% overnight. The 10-year note yielded 1.6147% in Asia on Friday, from as low as 1.5520% mid-week.

The bump in yields weighed on tech shares, amid some shifting from growth- to value stocks.

The Dow Jones Industrial Average rose 0.4%, while the Nasdaq Composite slipped 0.3%.

The dollar hovered near a one-week high versus major peers as traders looked to the upcoming inflation report for direction.

The dollar index sat at 90.097 on Friday, after touching 90.179 the previous session for the first time since May 20.

Oil prices extended gains from Thursday, bolstered by strong U.S. economic data that offset investors’ concerns about the potential for a rise in Iranian supplies.

Brent rose 20 cents, or 0.3%, to $69.66 a barrel, while U.S. West Texas Intermediate (WTI) crude added 34 cents, or 0.5%, to $67.19 a barrel.

Editing by Shri Navaratnam

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