GLOBAL MARKETS-Asia markets stumble as hot PPI print reins in Fed rate cut hype

By Gregor Stuart Hunter

SINGAPORE, Aug 15 (Reuters) - Stocks in Asia made an uneven recovery as higher-than-expected producer price inflation dampened expectations of a jumbo rate cut at the Federal Reserve's September meeting, while U.S. bonds and equity futures stabilised.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.3% after a report on Thursday from the Bureau of Labor Statistics which showed the Producer Price Index increased 0.9% in July on a month-over-month basis, well above economists' expectations.

"What it did was to get rid of all the chat about a 50 basis point cut," said Mike Houlahan, director at Electus Financial Ltd in Auckland.

The market is currently pricing in a 92.1% probability of a 25 basis point rate cut at its September meeting, compared with a 100% likelihood of a cut on Thursday, according to the CME Group's FedWatch tool. The chance of a jumbo 50 basis point cut fell to 0% from an earlier expectation of 5.7% a day ago.

U.S. stock futures ESc1 were flat in early Asian trading after ending a choppy trading session on Wall Street with mild gains on Thursday. The yield on the U.S. 10-year Treasury bond US10YT=RR was down 1 basis point at 4.2829%.

The two-year yield US2YT=RR, which is sensitive to traders' expectations of Fed fund rates, slipped to 3.7304% compared with a U.S. close of 3.739%. Nasdaq futures NQc1 extended losses into a third consecutive day, sliding 0.1% lower.

The dollar index =USD, which tracks the greenback against a basket of currencies of other major trading partners, retraced some gains after the PPI data release, last trading down 0.1% at 98.143.

The Nikkei 225 .N225 rebounded 0.4% after snapping a six-day winning streak on Thursday with its biggest one-day selloff since April 11, as Japanese GDP data showed the economy expanding by an annualised 1.0% in the April-June quarter, beating analyst estimates. The dollar weakened 0.3% against the yen to 147.64 JPY=EBS.

Australian shares .AXJO were last up 0.2%, while stocks in Hong Kong .HSI were down 0.9% following losses on Thursday for U.S.-listed exchange-traded funds tracking Chinese companies.

The CSI 300 .CSI300 gave up early gains and was last trading flat after the release of weaker-than-expected Chinese economic data for July including retail sales and industrial production. Markets in India and South Korea are closed for public holidays.

Cryptocurrency markets stabilised after a new record for bitcoin BTC= of $124,480.82 on Thursday proved fragile and promptly crumbled after falling short of its next key milestone. The digital currency was last up 0.7%, recovering some ground, while ether ETH= gained 1.7%.

"Bitcoin's failure to conquer the $125,000 resistance signals another consolidation phase," said Tony Sycamore, a market analyst at IG in Sydney.

In commodities markets, Brent crude LCOc1 was flat at $66.94 per barrel ahead of a meeting in Alaska between U.S. President Donald Trump and Russian leader Vladimir Putin.

Gold was slightly lower as the markets digested the path of inflation-adjusted interest rates, which typically move in the opposite direction from bullion prices. Spot gold XAU= was trading up 0.1% at $3,339 per ounce. GOL/

In early European trades, the pan-region futures STXEc1 were up 0.4%, German DAX futures FDXc1 were up 0.3% at 24,489, and FTSE futures FFIc1 were up 0.5%.