* U.S. stock futures down 0.4 pct
* March Fed rate hike seen as certainty
* China cuts 2017 growth target to 6.5 pct
* Korean won eases on North Korea tensions
* European shares seen falling 0.3-0.4 pct
By Hideyuki Sano
TOKYO, March 6 U.S. stock futures dropped but
Asian shares were resilient on Monday as investors weighed the
near-certain prospect of an interest rate hike in the United
States this month against news of China's slower 2017 growth
Risk appetites also took a hit on rising geopolitical
tensions in East Asia, as North Korea fired four ballistic
missiles early in the day, while a spat between China and South
Korea over missile defence deepened.
U.S. President Donald Trump's accusation that his
predecessor, Barack Obama, wiretapped him also cast a shadow on
U.S. stocks as some investors view his confrontational style as
distracting him from his economic agenda.
U.S. stock futures dropped as much as 0.45 percent, a
fairly large move for Asian trade. Japan's Nikkei
dropped 0.5 percent for the day.
European shares are expected to follow suit, with
spread-betters looking to a fall of 0.3-0.4 percent in Germany's
DAX and Britain's FTSE.
But MSCI's broadest dollar-denominated index of Asia-Pacific
shares outside Japan was up 0.4 percent, with
most markets in positive territory. South Korean shares also
erased earlier losses to post small gains.
"Asian shares were supported in light of U.S. rate hike
expectations. Higher resource prices and relatively robust
growth in China are underpinning markets," Yukino Yamada, senior
strategist at Daiwa Securities.
Federal Reserve Chair Janet Yellen on Friday all but
confirmed market expectations for an interest rate rise in
March, barring any sharp deterioration in economic conditions.
U.S. money market futures are pricing in about
a 90 percent chance the Fed will raise interest rates by 0.25
percentage point at its meeting on March 14-15, with another
rate hike fully priced in by September.
"A rate hike is almost a done deal now. So the focus will be
on the pace of rate hikes after that. If there's hawkish
projections, the dollar could rise further," said Masahiro
Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
The dollar dipped 0.3 percent to 113.77 yen while the
euro eased 0.1 percent to $1.0608.
The yuan was little moved so far, fetching 6.8920 yuan per
dollar in offshore trade after China cut its growth
target for this year to 6.5 percent, compared to its 2016 goal
of 6.5 to 7 percent. Growth in 2016 came in at 6.7 percent.
Dampening risk appetite was rising tension over North Korea,
which on Monday fired four ballistic missiles, three of which
landed in Japan's exclusive economic zone, Japanese Prime
Minister Shinzo Abe said. It was the latest in a series of
provocative tests by the reclusive state.
The move came just after Japanese media reported on Saturday
U.S. Secretary of State Rex Tillerson is due to visit Japan,
South Korea and China this month to discuss North Korea on his
first trip to the region since he took up his post.
"This is the worst type of 'geopolitical' risk. It is one
that it's hard to hedge against. The 'peace, or lack thereof'
risk has been growing for the 10-plus years and is becoming a
bigger issue and another reason for caution," said Dan Fuss,
vice chairman of Loomis Sayles.
Adding to the tensions in the region, South Korea's trade
minister said on Sunday that Seoul's responses against
discriminating action by China towards South Korean companies
will be strengthened.
South Korean media said last week Chinese government
officials had given verbal guidance to tour operators in China,
to stop selling trips to South Korea days after the Seoul
government secured land for a U.S. missile-defence system.
The Korean won fell 0.4 percent to five-week lows.
Markets also remain focused on Trump's economic policies and
how much of fiscal stimulus would come through during his first
term in office.
"There are worries that Trump may not be able to push
through his spending plans, given delay in appointments of key
staff. It now looks possible that the next year's budget hardly
reflects his agenda," said Masashi Murata, senior currency
strategist at Brown Brothers Harriman.
The 10-year U.S. Treasuries yield dipped to 2.472 percent
after hitting a two-week high of 2.521 percent on
Oil prices dipped on concern over Russia's compliance with a
global deal to cut oil output and China's lower growth target.
International benchmark Brent futures fell 0.7
percent to $55.51 per barrel, down 0.3 percent.
Figures released last week showed Russia's February oil
output was unchanged from January, casting doubt on Russia's
moves to rein in output as part of a pact with oil producers
(Additional reporting by Tomo Uetake; Editing by Shri
Navaratnam and Richard Borsuk)