Asia stocks dip after rally, focus back on fundamentals

By Shinichi Saoshiro

TOKYO (Reuters) - Asian stocks dipped on Tuesday as the markets took a breather after the previous day's rally, although tech-inspired Wall Street gains helped limit the losses, with investor focus moving away from trade concerns and back to benign economic fundamentals.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1 percent after surging 1.4 percent the previous day.

Japan's Nikkei <.N225> gained 0.2 percent and South Korea's KOSPI lost 0.3 percent.

Wall Street's three major indexes rose overnight, led by a rally in tech stocks, pushing the Nasdaq to a record closing high. [.N]

Friday's better-than-expected May U.S. employment report has helped revive investor optimism for the world's biggest economy, shifting the focus away from recent trade tensions.

"Strong U.S. data put fundamentals back in the spotlight, just as Italian political concerns were ebbing," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

Italy's anti-establishment parties formed a coalition government on Friday to end three months of deadlock and averting potentially destabilising snap elections.

"The next focal point is the upcoming FOMC (Federal Open Market Committee) meeting and whether the Fed shows any indication of accelerating the pace of its rate hikes following the strong employment report," said Ichikawa.

The Federal Reserve is scheduled to hold a two-day policy meeting starting on June 12.

With risk aversion ebbing in the broader markets, safe-haven government bonds were sold and their yields rose.

The 10-year U.S. Treasury note yield stood near an 11-day high of 2.946 percent brushed overnight.

The yield had declined to a 1-1/2-month low of 2.759 percent a week ago when Italian political concerns had soured investor sentiment.

The rebound in U.S. yields lifted the dollar to a near two-week high of 109.970 yen and also helped slow the euro's gains against the greenback.

The euro was flat at $1.1699 , nudged off the 12-day peak of $1.1754 touched on Monday on the ebb in concerns towards Italy.

The dollar index against a basket of six major currencies was little changed at 94.040 after edging down 0.2 percent overnight.

The Australian dollar stood near a six-week high of $0.7666 reached overnight on upbeat domestic data.

In commodities, crude oil was on the defensive with expanding U.S. production and possible global supply growth weighing on prices. [O/R]

U.S. crude futures were 0.3 percent higher at $64.96 a barrel after dropping 1.6 percent overnight and touching $64.57, the lowest since April 10.

Safe haven gold was headed for the fourth session of losses with spot gold a shade lower at $1,291.21 an ounce .

(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)