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Asian shares lower as North Korea suspends talks, U.S. yields shoot higher

Reuters  |  SHANGHAI 

By Andrew Galbraith

SHANGHAI (Reuters) - Asian markets fell in early trade on Wednesday after Pyongyang called off talks with Seoul, throwing a major U.S.-North Korean summit into question, and a spike in the U.S. 10-year Treasury yield to a seven-year high knocked sentiment on Wall Street.

MSCI's broadest index of shares outside <.MIAPJ0000PUS> was down 0.1 percent.

Strong U.S. and factory data on Tuesday pushed the U.S. 10-year yield through a key level to hit 3.095, its highest since July 2011. The rise in yields hurt U.S. share markets on concerns it would undercut stock valuations.

Asian shares are under pressure after cancelled high-level talks with Seoul, denouncing military exercises between and the United States, breaking from several months of easing relations on the peninsula.

This has also raised concerns about the planned summit between U.S. and his North Korean counterpart leader scheduled next month

"This will weigh on the Korean reconstruction beneficiaries that have had a strong run on peace and even reunification hopes recently," analysts wrote in a note. "The broader risk for the region if talks do break down is that Trump no longer feels the need to keep on side and could escalate trade tensions again."

South Korea's <.KS11> was 0.4 percent lower, Japan's Nikkei <.N225> was down 0.3 percent and Australian stocks <.AXJO> edged up 0.1 percent.

New Zealand's index <.NZ50> was down around 1.4 percent after earlier falling as much as 2.3 percent, after dairy company A2 Milk Ltd's revenue guidance fell short of expectations, knocking the shares to a three-month low.

In the United States, stronger growth and the potential for steadily rising inflation have added to expectations the may move to increase interest rates at a faster pace.

The 10-year yield was last at 3.0686 percent.

The two-year yield , which rises with traders' expectations of higher Fed fund rates, hit 2.5890 percent on Tuesday, its highest level since August 2008, and was last at 2.5766 percent.

On Wall Street, the Dow Jones Industrial Average <.DJI> fell 193.00 points, or 0.78 percent, to 24,706.41, the 500 <.SPX> lost 18.68 points, or 0.68 percent, to 2,711.45 and the <.IXIC> dropped 59.69 points, or 0.81 percent, to 7,351.63.

In energy markets, prices remained near recent highs amid concerns U.S. sanctions on may restrict crude exports from a

U.S. light crude was 0.6 percent lower at $70.92 after reaching $71.92 on Tuesday, its highest level since November 2014.

Brent settled at $78.43 a barrel, up 20 cents, or 0.3 percent. It earlier reached an intraday peak of $79.47 a barrel, up $1.24 and its highest since November 2014.

The dollar was mostly flat against the yen at 110.29 .

The US dollar index <.DXY>, which tracks the greenback against a basket of six major rivals, was up 0.05 percent at 93.270. On Tuesday, the index had hit its highest level this year, lifted by the 10-year yield.

In commodities markets, gold was slightly higher, with spot gold trading at $1293.11 per ounce. [GOL/]

(Reporting by Andrew Galbraith, additional reporting by Swati Pandey in SYDNEY; Editing by Sam Holmes)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 06:45 IST