Asian stocks set for cautious start on weak U.S. cues

HONG KONG (Reuters) - Asian stocks may slip for a second consecutive day on Thursday as a weak Wall Street and declining commodity prices, especially for oil, prompted investors to trim their exposure to risky assets.

With the outcome of the French presidential elections due at the weekend, markets are set to trade in well worn trading ranges, barring any major data surprises in Asia.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.5 percent in early trades after declining nearly 1 percent on Wednesday.

"Markets may continue to trade on a cautious tone with the French elections coming up this weekend," ANZ strategists wrote in a daily note.

Centrist Emmanuel Macron clung on to his status as favourite to win France's presidential election in a four-way race that is too close to call, as the camp of far-right challenger Marine Le Pen ramped up its eurosceptic rhetoric in a row with Brussels.

Weak results from index heavyweight IBM pulled the S&P 500 and Dow lower with falls in energy sector stocks <.SPNY> also weighing on the broader market.

Bonds also came in for some profit taking after a recent rally, with yields on benchmark 10-year U.S. Treasury notes firming to 2.21 percent from a five-month low of 2.165 percent hit on Tuesday.

A run of disappointing U.S. economic data and doubts how far the Trump administration will progress with tax cuts have quelled expectations of faster inflation and boosted fixed-income debt.

The dollar failed to capitalise on higher U.S. yields with the greenback hugging the 200-day moving average of around 108.85 against the Japanese yen as traders preferred to trade on market technicals rather than take fresh bets.

Oil languished near a two-week low after a surprising build in U.S. gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut.

U.S. crude futures edged 0.42 percent higher to $50.65 a barrel, after posting a near 4 percent drop overnight, the biggest one-day decline since March 8.

Elsewhere, gold was trading at $1279.48 per ounce, below Monday's peak of $1,295.42.

(Reporting by Saikat Chatterjee; Editing by Eric Meijer)