* Hawkish Fed comments prop up Treasury yields
* Dollar rises to near one-month highs vs peers
* Risk indicators edge higher as outlook turns wary
* Oil consolidates gains; gold strong
By Saikat Chatterjee
HONG KONG, April 10 (Reuters) - Asian stocks slipped on Monday as increased geopolitical risks prompted investors to favour safe-haven bets such as government debt while the dollar drew support from Federal Reserve policy tightening expectations.
European markets were set to follow in Asia’s footsteps with index futures pointing to a broadly flat start.
The cautious backdrop - fed by increasing geopolitical tensions in the Middle East and the Korean Peninsula - contrasted with rising optimism about the outlook for global growth, with Chinese data this week expected to show the economy performing well.
Top aides to U.S. President Donald Trump differed on Sunday on where U.S. policy on Syria was headed after last week’s attack on a Syrian air base, while U.S. Secretary of State Rex Tillerson warned the strikes were a warning to other nations, including North Korea.
“The geopolitical risks will continue to hold markets back this week though there may be some opportunities for individual stock or sector plays,” said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong, with about $130 million in assets.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell for a third consecutive session, heading back towards a three-week low tested on Friday.
A U.S. Navy strike group will be moving toward the western Pacific Ocean near the Korean peninsula as a show of force, a U.S. official told Reuters on Saturday, as concerns grow about North Korea’s advancing weapons program.
Korean stocks led regional losers with the main index falling to its lowest levels since mid-March as foreigners sold stocks for a sixth consecutive session.
Hong Kong bucked the regional weakness, due to strength in property stocks and financial counters. Australian shares were also stronger, up 0.6 percent at a near two-year high as higher oil and metal prices propped up commodity plays.
“The risks of a conflict have certainly grown and that should keep the dollar supported against most Asian currencies with hawkish comments from the U.S. central bank also helping,” said Gao Qi, an FX strategist at Scotiabank in Singapore.
Economic data also offered little support with major U.S. indexes closing lower in choppy trade after a key jobs report on Friday showed the economy added 98,000 jobs in March, the fewest since last May and well below economists’ expectation of 180,000.
Risk indicators have edged higher with the CBOE Volatility Index trading at near 13 compared to around 11 at the beginning of March, prompting some analysts to warn of a pull back in global equities.
Latest flows data showed investors yanked money out of both developed and emerging market equity funds in the week ending April 5, according to Thomson Reuters Lipper data.
The dollar index, a trade-weighted basket of the greenback against its major rivals rose to near a one-month high of 101.30.
Only the yen, a favoured haven in times of stress, offered some resistance against the greenback at 111.44 yen, after touching 110.11 on Friday, its lowest since March 27.
“Geopolitical risk can be a potentially positive factor for the yen, with risk aversion and flight to safety,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
Support for the dollar also came from rising U.S. yields after comments from a U.S. policymaker boosted expectations for Federal Reserve interest rate increases this year.
Yields on 10-year U.S. Treasuries were at 2.38 percent on Monday after briefly breaking below a significant chart barrier at 2.30 percent on Friday for the first time this year.
Spot gold was last at $1,252.70 per ounce. It has rallied nearly 5 percent over the past month.
Oil prices held firm at $52.36 per barrel, on risks that the Syria conflict may spread more widely within the oil-rich Middle East region.. (Additional reporting by TOKYO markets team; Editing by Richard Pullin and Sam Holmes)