* Rush to safety boosts yen and US Treasuries, US dollar slips
* Russia's emergency rate hike fails to stop rouble slide
* Oil extends losses, adds to danger of global disinflation
* Fed still expected to take rhetorical step toward tightening
By Wayne Cole
SYDNEY, Dec 17 (Reuters) - An uneasy hush settled over Asian markets on Wednesday as a brewing financial crisis in Russia and the rout in oil prices sent investors scurrying for the cover of top-rated bonds.
Yields on British, German and Japan sovereign debt had all hit record lows while long-dated U.S. and Australian yields reached their lowest since 2012.
Asian share markets were mixed with Japan's Nikkei recouping a sliver of its recent hefty losses. MSCI's index of Asia-Pacific shares outside Japan slipped 0.6 percent to a nine-month trough.
In Europe, the FTSE is seen opening down 0.9 percent, the DAX 1.2 percent and the CAC 1.6 percent.
The stakes were all the greater as the U.S. Federal Reserve's last policy meeting of the year could well see it drop a commitment to keeping rates low for a "considerable period".
That would be taken as a step toward raising interest rates, even as growth in the rest of the world sputters and falling commodity prices add to the danger of disinflation.
A new wrinkle was the risk of financial contagion spreading from Russia where an emergency hike in interest rates failed to stop the rouble's descent to new lows.
It was quoted around 68.00 to the dollar having been as far as 80.00 at one stage on Tuesday as speculation mounted that Moscow will have to tighten further or perhaps impose capital controls.
The urge to close leveraged positions caused collateral damage to the dollar as investors had been very long of the currency in anticipation of further gains, and helped the euro up to $1.2510.
The rush from risk tended to benefit the safe haven yen, with the dollar back at 116.79 having been atop 118.00 on Tuesday. The commodity linked Australian dollar also took a dive to a five-year trough of $0.8157.
A year-end dearth of liquidity was leading to wild moves in even the most staid of assets. The oil-exposed Norwegian crown for instance, hit an all time low by one measure on Tuesday after carving out the widest daily trading range since the global financial crisis.
"The combination of the rouble crisis and poor liquidity broadly resulted in a period of total dysfunction across global FX and rate markets," reported analysts at Citi.
On Wall Street, the Dow had shed early gains to end Tuesday down 0.65 percent, while the S&P 500 lost 0.85 percent and the Nasdaq 1.24 percent.
There was no respite for oil as Brent leaked another 66 cents to $59.35 a barrel in Asia on Wednesday, while U.S. crude lost $1.12 to $54.81.
On the face of it, the downward spiral in oil should be good news as it effectively acts as a tax cut for consumers world wide. JPMorgan estimates the boost to spending could add 0.4 percentage points to global growth over 2015.
But a halving of fuel costs is also a force for disinflation in a world where the supply of goods already exceeds demand.
Data out of the UK showed inflation had ebbed to its slowest in 12 years in November, arguing strongly against the need for early rate rises from the Bank of England.
The Fed still seems keen to start raising U.S. rates by mid-2015. However, with inflation still well below its 2 percent target and likely to dip further as fuel prices fall, investors are wagering that any hike will only add to the disinflationary impulse in the economy.
A key market measure of inflation expectations for the next five years has been falling fast since August and hit new lows at 2.37 percent on Tuesday.
Likewise, yields on 30-year Treasury bonds touched their lowest since late 2012 at 2.67 percent as investors priced out the risk of higher inflation. (Editing by Shri Navaratnam)