* Sterling retreats after YouGov poll shows PM May losing
* European stocks set for positive open
* Asia ex-Japan flat, Nikkei rises on weaker yen, upbeat
* Dollar recovers but gains limited by political tensions
* Oil advances on report of decline in U.S. stockpiles
By Nichola Saminather
SINGAPORE, June 1 Sterling retreated on Thursday
on fears that Prime Minister Theresa May could lose control of
parliament in Britain's June 8 election, while conflicting
signals on the health of China's manufacturing sector kept most
Asian stock markets in check.
European stocks, however, looked set to open on a more
positive note, with financial spreadbetter CMC Markets expecting
major markets to start the day up about 0.1 percent.
Sterling fell 0.1 percent to $1.2877 after a YouGov
poll showed May could be well short of the number of seats
needed to form a government, raising the prospect of political
turmoil just as formal Brexit talks begin.
Other polls, however, show May winning a big majority.
The currency hit a near six-week low on Wednesday but
recovered to close higher.
MSCI's broadest index of Asia-Pacific shares outside Japan
was flat after four sessions of losses as
investors took profits after stocks hit a two-year high last
week and as economic and geopolitical concerns continued to
weigh on sentiment.
Chinese shares fell as much as 0.5 percent
after a private survey showed the country's manufacturing
activity contracted in May for the first time in 11 months. The
findings contrasted with official data on Wednesday which
suggested growth remained steady.
South Korea's KOSPI fell 0.1 percent and the Korean
won fell 0.2 percent to 1,120.67 won to the dollar after
data showing factory activity shrank for the 10th straight
However, losses were limited by other data showing rising
exports in May.
Factories across much of Asia ran into a soft patch in May
as export demand slowed, according to business surveys, but
analysts said the weakness was likely to be temporary amid signs
of steady improvement in the global economy.
Manufacturing activity continued to improve in most of the
region -- albeit at a more modest pace -- and business
confidence remained strong overall.
"Most of emerging Asia's manufacturing PMIs slipped in May
but we doubt this marks the start of a significant downturn in
Asian manufacturing," Krystal Tan, Asia economist at Capital
Economics, wrote in a note.
Japan's Nikkei advanced 1 percent after data showed
recurring first-quarter corporate profits were the highest on
record for the January to March period.
An increase in capital expenditure in the first quarter
added to a raft of recent data pointing to economic expansion,
while manufacturing growth in Japan also rose to a three-month
high, according to a business survey.
Overnight, Wall Street closed slightly lower as financials
lost ground after JPMorgan and Bank of America warned of revenue
weakness in the current quarter, but gains in defensive plays
offset the decline.
All three major U.S. indexes ended May
in positive territory.
The dollar gained after touching a near two-week low against
the yen overnight.
It was up 0.4 percent to 110.06 yen on Thursday,
its first positive session in five, but concerns about U.S.
politics capped gains.
President Donald Trump's administration has been the focus
of independent investigations by the Federal Bureau of
Investigation and several congressional panels over alleged
Russian meddling in the 2016 presidential election and potential
collusion by the Trump campaign.
The House intelligence committee on Wednesday approved
subpoenas for Trump's former national security advisor and
personal lawyer in connected with the Russian meddling probe.
A decision by Trump on whether the U.S. will remain in a
global pact to fight climate change, due at 3 p.m. EDT (1900
GMT) is also keeping markets on edge.
A source close to the matter said he was preparing to pull
out of the deal.
The dollar index, which tracks the greenback against
a basket of six major peers, inched up 0.1 percent to 97.003
after posting a 0.4 percent loss on Wednesday.
Clouding the picture further was a mixed bag of economic
data on Wednesday.
Pending home sales fell for a second straight month in
April, hindered by a lack of supply, while an index of U.S.
Midwest manufacturing activity rose in May.
The Chinese yuan continued its recent run of gains,
strengthening for a fourth straight session after news that
authorities are tweaking their formula for the daily reference
rate in a bid to quash persistent depreciation pressure.
It was last trading at 6.7948 per dollar, close
to its strongest level since November hit earlier in the
session, after the People's Bank of China set the midpoint
The euro was flat at $1.12405.
In commodities, oil prices advanced on a report that showed
U.S. crude stockpiles had fallen more than expected.
That came on the heels of Wednesday's steep declines driven
by after an increase in Libyan output that helped boost monthly
OPEC production for the first time this year.
Global benchmark Brent advanced 1.7 percent to
$51.16 a barrel after slumping 3 percent on Wednesday.
U.S. crude rose 0.9 percent to $48.75, after plunging
2.7 percent in the previous session.
Gold rose 0.1 percent to $1,266.18 an ounce.
(Reporting by Nichola Saminather; Additional reporting by
Gertrude Chavez-Dreyfuss; Editing by Kim Coghill)