* European markets also poised for lower open
* Yellen suggests allowing inflation to overshoot 2 pct
* 30-year U.S. bond yield hit 4-month high on inflation
* U.S. stocks futures down 0.3 pct
By Hideyuki Sano and Nichola Saminather
TOKYO/SINGAPORE, Oct 17 Asian shares fell on
Monday while the dollar held firm near seven-month high after
comments from Federal Reserve Chair Janet Yellen that signalled
the need for aggressive steps to rebuild the U.S. economy
boosted long-dated bond yields.
European shares also looked set for modest early losses,
with financial spreadbetters predicting Britain's FTSE 100
, Germany's DAX and France's CAC 40
would all open down about 0.2 percent.
U.S. stock futures fell 0.3 percent.
In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan dropped 0.5 percent, with Hong
Kong's Hang Seng hitting 1-1/2-month lows.
Japan's Nikkei closed up 0.3 percent, aided by a
On Friday, U.S. stocks surrendered earlier gains to close
flat following Yellen's comments that the Fed may need to run a
"high-pressure" economy to reverse damage from the global
financial crisis that depressed output.
Speculation that she may prefer to keep an easy monetary
policy stance for a long time even if inflation exceeds the
Fed's 2 percent target drove the 30-year bond yield to a
four-month high of 2.565 percent. It last stood at
"Markets are reacting to the possibility that the Fed might
join the Bank of Japan in conducting policy to steepen the yield
curve," Ric Spooner, chief market analyst at CMC Markets in
Sydney, wrote in a note.
"In the Fed's case, this might amount to running the
gauntlet of higher inflation with a very slow pace of monetary
And inflation appears to be picking up. The U.S. producer
price index for final demand increased 0.3 percent last month.
In the 12 months through September, the PPI jumped 0.7 percent,
the biggest increase since December 2014.
A gauge of investors' inflation expectations for the U.S.,
the breakeven inflation rate based on inflation-linked bonds
, rose to its highest level in about five months.
Investors are awaiting a raft of global economic data this
week, including U.S. industrial production on Monday; U.S. and
UK consumer prices, and UK producer prices on Tuesday; and
Chinese third-quarter gross domestic product on Wednesday.
The European Central Bank will also hold its policy meeting
on Thursday and Eurozone consumer confidence data for October is
due on Friday.
China's CSI 300 index fell 0.6 percent, while Hong
Kong's Hang Seng slid 0.9 percent, after earlier falling
to the lowest since Sept. 1.
China's economy likely grew 6.7 percent in the third quarter
from a year earlier, the same pace as the previous quarter, as
increased government spending and a property boom offset
stubbornly weak exports, according to a Reuters poll of 58
But analysts are increasingly worried that China's growth is
becoming too reliant on government spending, ballooning debt
levels and a housing market that is showing signs of
On Friday, China reported higher-than-expected inflation in
September for consumers and producers alike, with producer
prices rising for the first time since January 2012.
Oil prices, which have risen for four straight weeks, have
helped drive the pickup in inflation globally.
U.S. crude futures fell 0.5 percent to $50.10 per
Brent crude futures stood at $51.81, down 0.3
Some market players are wary of a possible hit to investors'
risk appetite after Iraq's Prime Minister Haider al-Abadi
announced the start of an offensive to retake Mosul, the capital
of Islamic State's so-called caliphate in Iraq.
Elsewhere in markets, higher bond yields boosted the dollar
to its largest weekly rise against a basket of six major
currencies in more than seven months last week.
The dollar index touched a high of 98.169 on Monday, and
last stood at 98.064.
The euro, which touched a 2 1/2-month low of $1.0964
earlier on Monday, rose to $1.09845.
The yen traded at 104.22 per dollar, near its 2
1/2-month low of 104.635 touched last Thursday.
The Thai baht weakened 0.1 percent as Thailand has
sought to dispel any concern about a royal succession after
Crown Prince Maha Vajiralongkorn said he would delay his
ascension to the throne while he mourns his father.
"The passing of King Bhumibol has great significance, and
Thailand will not only be entering a period of mourning, but one
of dynamic changes and political uncertainty," said Mark Mobius,
executive chairman of Templeton Emerging Markets Group.
"Under such circumstances, market observers will be looking
out for potential issues over political friction and royal
succession, and investors should be prepared for volatility. In
the long run however, we believe the market uncertainty will
ultimately be outweighed by Thailand's strong fundamentals," he
(Editing by Kim Coghill)