* Asian stock markets : tmsnrt.rs/2zpUAr4
* Nikkei slips as pre-holiday short-covering lifts yen
* Dollar firm elsewhere on talk of upbeat Q1 GDP
* More central banks turn dovish amid sluggish inflation
By Wayne Cole and Swati Pandey
SYDNEY, April 26 (Reuters) - Asian shares were headed for their biggest weekly loss in more than a month on Friday, while the dollar held around two-year highs on speculation that U.S. data later in the day will show its economy is outperforming the rest of the developed world.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent for its third straight day of losses, with most stock markets around the region either down or flat. For the week, the index fell 1.3 percent.
Cues from overseas were mixed in early trades. Euro Stoxx 50 futures and London’s FTSE futures gained 0.1 percent each while German DAX futures were barely changed. E-Mini futures for the S&P 500 were off 0.1 percent.
Despite this week’s dismal performance, Asian shares have had a strong rally since a brutal sell-off in late 2018 - they are up 12.5 percent so far this year - and analysts hope the gains will continue with most major central banks now tilting to an easing bias.
“Putting short-term risks aside share markets are still likely to end the year higher,” said Shane Oliver, Sydney-based head of investment strategy at AMP.
“Put simply the rebound in shares reflects a reversal of last year’s negatives with central banks...more dovish, lower inflation allowing lower bond yields, stabilisation and in some case improvement in global growth indicators which should underpin reasonable profit growth and the risks around a trade war receding.”
A string of solid numbers in the United States has led analysts to revise up their forecasts for growth and the latest median polled by Reuters is for an annualised 2.0 percent.
The closely-watched estimate of GDP from the Atlanta Federal Reserve is projecting an outcome of 2.7 percent, a huge turnaround from a few weeks ago when it was at 0.5 percent.
Yet the rebound has not been mirrored in inflation, which remains subdued across much of the developed world, prompting a host of central banks to turn dovish.
Just this week central banks in Sweden and Canada have backed off plans to tighten, while the Bank of Japan tried to dispel doubts about its accommodative stance by pledging to keep rates at super-low levels for at least one more year.
European Central Bank Vice-President Luis de Guindos on Thursday opened the door to more money-printing if needed to boost inflation in the euro zone.
Rate cuts look much likelier in Australia and New Zealand after recent disappointingly weak inflation reports.
The Federal Reserve holds a policy meeting next week and is expected to reaffirm its patient stance. A Reuters poll of analysts out Thursday found most believed the Fed was done with tightening altogether.
In currencies, the euro was off 1 percent for the week at $1.1133 as euro zone economic figures continued to disappoint.
Against a basket of currencies, the dollar was 0.8 percent firmer for the week so far at 98.145 having touched its highest since May 2017.
“The dollar will remain bid in this environment while data continues to look more favourable from the U.S., especially with regard to the EU,” said Nick Twidale, head of operations at broker Rakuten Securities.
“Tonight’s U.S. GDP print could be crucial from a technical point of view. If we see a good number it will probably see the euro targeting the key psychological level of $1.1000.”
The yen proved an outlier by gaining as speculators cut short positions ahead of holidays which will see most Japanese markets shut for six whole trading days.
The exceptionally long break has investors concerned there could be another “flash crash” like the one in early January that drove the yen massively higher in a matter of minutes.
The dollar was flat at 111.61 yen, after shedding 0.5 percent overnight, but was buoyed elsewhere by a solid report on U.S. durable goods orders.
The rise in the yen and soft Japanese industrial data nudged the Nikkei down 0.7 percent.
In commodity markets, spot gold was slightly firmer at $1,281.89 per ounce.
Brent crude ran into profit-taking after hitting $75 per barrel on Thursday for the first time in nearly six months following the suspension of some Russian crude exports to Europe.
Brent crude futures lost 21 cents to $74.14 a barrel, while U.S. crude was last down 37 cents at $64.84.
Editing by Kim Coghill