SHANGHAI/TOKYO, May 16, 2018 (Reuters) - Asian stock markets dipped on Wednesday after Pyongyang abruptly called off talks with Seoul, throwing a US-North Korean summit into doubt, while surging bond yields revived worries about faster US interest rate hikes that could curb global demand. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.1 per cent as Pyongyang's move appeared to mark a break in months of warming ties between North and South Korea and with Washington. European shares looked set to open flat to marginally higher on Wednesday and US S&P futures ESc1 were little changed. Financial spread-betters expect London's FTSE .FTSE to open 3 points higher at 7,725, Frankfurt's DAX .GDAXI to open 19 points higher at 12,989 and Paris' CAC .FCHI to open unchanged at 5,533. A cancellation of the June 12 summit in Singapore could see tensions on the Korean peninsula flare again as investors worry about China-US trade tensions and the sustainability of global economic growth. "This will weigh on the Korean reconstruction beneficiaries that have had a strong run on peace and even reunification hopes recently," JPMorgan analysts wrote in a note. "The broader risk for the region if talks do break down is that Trump no longer feels the need to keep China on side and could escalate trade tensions again." Strong US retail sales and factory data on Tuesday pushed the US 10-year yield through a key level to hit 3.095 per cent, its highest since July 2011, raising worries about higher borrowing costs for companies worldwide. The 10-year yield US10Y=RR was last at 3.071 per cent. The rise in yields hurt US share markets on concerns it would undercut stock valuations. [.N] The Dow Jones Industrial Average .DJI fell 193.00 points, or 0.78 per cent, to 24,706.41, the S&P 500 .SPX lost 18.68 points, or 0.68 per cent, to 2,711.45 and the Nasdaq Composite .IXIC dropped 59.69 points, or 0.81 per cent, to 7,351.63. Elsewhere in Asia, Japan's Nikkei .N225 slid 0.4 per cent, while South Korea's KOSPI .KS11 struggled for traction. Stocks in China .SSEC dipped 0.3 per cent as traders awaited news from a second round of Sino-US trade talks in Washington this week, with both sides believed to be still far apart. But Australian stocks bucked the trend and advanced 0.2 per cent. The strong US data underpinned the dollar in currency markets. The US dollar index .DXY, which tracks the greenback against a basket of six major rivals, hit a 2018 high of 93.46 on Tuesday and last stood at 93.22. The euro fell to as low as $1.1814 EUR=, its lowest level in five months. The dollar held firm at 110.24 yen having hit a near four-month high of 110.45 yen JPY= on Tuesday. The yen largely shrugged off data that showed Japan's economy shrank more than expected in the January-March quarter. "US retail data assured that the world is still in a synchronized global growth. If US retail had been a disappointment, the market would have taken Japan's GDP more negatively," said Tohru Yamamoto, chief fixed income strategist at Daiwa Securities. High-yielding Asian currencies were particularly vulnerable to higher US yields, which could prompt investors to shift funds out of emerging markets. The Indonesian rupiah IDR= hit a 2-1/2-year low while the Malaysian ringgit MYR= hit a four-month low.
