RPT-GLOBAL MARKETS-Asia stocks drop, focus on inflation and oil

                                
 (Repeats to wider audience with no changes to text)
                                
 By Kevin Plumberg
                                
 HONG KONG, May 20 (Reuters) - Asian stocks dropped on
Tuesday, snapping a six-day rise, weighed down by retailers and
property companies as the relentless climb in oil prices
fuelled inflation fears.
                                
 U.S. oil <CLc1> was trading above $127 a barrel after a
record close on Monday, supported after OPEC President Chakib
Khelil said the cartel would not increase output at its next
meeting in September.
                                
 Oil prices have risen by around a third so far this year,
and higher energy costs have spread fear among investors that
consumers and businesses around the world would curb their
spending at a time when the global economy is slowing.
                                
 Shares in Europe were also expected to head lower, with
financial bookmakers forecasting the main index in London
<.FTSE> would open down 22-28 points, Germany <.GDAXI> down
21-28 points and French shares <.FCHI> down 6-25 points.
                                
 Safe-haven U.S. Treasuries climbed and the Swiss franc,
which often benefits in times of market volatility,
strengthened.
                                
 Hong Kong's Hang Seng index <.HSI> was down 1.9 percent at
25,260.11 by 0602 GMT, and stocks in the territory were among
Asia's biggest decliners.
                                
 China Mobile <0941.HK>, the world's largest mobile cellular
carrier by users, was off 2.5 percent after it said subscriber
growth had slowed in April.
                                
 Australia's benchmark S&P/ASX 200 index <.AXJO> fell 0.7
percent, with Macquarie Group Ltd <MQG.AX>, the country's top
investment bank, one of the biggest drags on the index after it
said it faced a challenging year.
                                
 China's Shanghai Composite Index <.SSEC> fell 2.3 percent,
and Japan's Nikkei average <.N225> lost 0.8 percent, after
finishing on Monday at its highest level since early January.
                                
 A leading MSCI index of Asian shares outside Japan
<.MIAPJ0000PUS> fell 1.4 percent and, while it has gained
almost 19 percent since a 2008 low in mid-March, the index is
still down 6.3 percent so far this year.
                                
 "We're seeing a lot of the same trends as yesterday --
trading houses and steel firms are up on strong commodity
prices, while retailers are down since their general outlook is
not so good due to concerns about consumption, with oil prices
so high," said Hiroaki Osakabe, fund manager at Chibagin Asset
Management.
                                
 "NOT AGAIN"
                                
 Stocks around the world rose to a four-month peak on Monday
on optimism the worst of the credit crisis had passed and an
economic recovery was under way.
                                
 However, technology shares dropped in late trade after grim
comments from a chip maker, spreading unease about the outlook
for business and consumer spending.
                                
 The turnaround on Tuesday lifted government bond prices.
                                
 In Japan, June 10-year government bond futures <2JGBv1>
rose 0.35 point to 135.47, pulling away from a seven-month low
of 134.28 struck last week.
                                
 Benchmark 10-year U.S. Treasury notes <US10YT=RR> climbed
2/32 in price to yield 3.824 percent, dipping 1 basis point
from late U.S. trade. The 10-year yield rose briefly above 3.98
percent last week, the highest in the year to date.
                                
 U.S. wheat futures <Wc1> rose sharply on worries that a
lack of rain in key growing areas could have tightened supply
in Australia. Wheat futures rose as much as 1.7 percent, while
soybeans, corn and rice were also up.
                                
 "From the bank managers to the farmers to the consumers,
there's a definite strong unease felt by everyone. You can hear
it in the back of their minds, 'oh no, not again'," said Garry
Booth of commodities broker MF Global.
                                
 Australia's central bank considered raising interest rates
earlier this month as inflation was uncomfortably high, but in
the end decided to give its already restrictive monetary policy
time to work, minutes of the May policy meeting showed.
                                
 The news sent the Australian dollar to a 24-year high
against the U.S. dollar, around US$0.9590 <AUD=>.
                                
 The U.S. dollar slipped against the euro and yen after
rebounding overnight when April U.S. leading economic
indicators suggested the world's largest economy was turning
the corner.
                                
 The euro edged up to $1.5559 <EUR=>, while the dollar
slipped to 104.04 yen <JPY=>.
                                
 For global investors, the focus on Tuesday will probably be
on the May reading of German economic sentiment, particularly
after a measure of U.S. consumer sentiment plunged on Friday to
its lowest in 28 years. [ID:nL16626937]
                                
 April U.S. producer price data is due later. Economists are
expecting wholesale price pressures to ease slightly.
[ID:nN19548199]
 (Additional reporting by Alison Leung in HONG KONG, Chikako
Mogi and Eric Burroughs in TOKYO and Michael Byrnes in SYDNEY;
Editing by Ian Geoghegan)