* MSCI Asia ex-Japan inches up, Nikkei tumbles on profit taking
* Dollar vulnerable after weak manufacturing ISM
* Reserve Bank of Australia stands pat, keeps door open for easing
* European shares likely resume trade with decline
By Chikako Mogi
TOKYO, April 2 (Reuters) - Asian shares were capped while the dollar eased on Tuesday, with investors growing cautious ahead of new indicators that could flag slowing U.S. economic momentum.
The private ADP employment report and the latest weekly jobless claims figures precede the key monthly U.S. nonfarm payrolls report on Friday.
European markets were likely to return from Easter holidays on a decline, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX to open down as much as 0.3 percent. Benchmark indices in Spain and Italy were likely to drop 0.8 percent and 0.7 percent respectively at the open.
U.S. stock futures were steady, pointing to a calm Wall Street start after falling overnight. The Institute for Supply Management's index of national factory activity slipped in March with new orders, a key indicator of future growth, accounting for much of the fall.
Oil and copper, markets sensitive to industrial demand, fell as investors focused on Monday's official Chinese factory activity report which came in below forecasts.
"You see the U.S. economy settling into a long, hard grind of moderate growth of around 1 to 1.5 percent, growth in previous recoveries was closer to 3.5 percent," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
"With this kind of growth, the United States is going to struggle to bring down unemployment which is a real drag on the economy."
A run of generally solid U.S. economic reports helped restore global risk appetite despite worries in the euro zone after the Cyprus bailout and some growth concerns in China.
The MSCI's broadest index of Asia-Pacific shares outside Japan gave up earlier gains to inch down 0.1 percent, pulled lower by a 1 percent slide in South Korean shares and weak Chinese shares.
But Australian shares bucked the trend and rose 0.4 percent, as investors returned from the Easter break looking for bargains after last week's dip. The Reserve Bank of Australia helped, keeping its main cash rate at a record low of 3.0 percent but leaving open the possibility of further easing.
DOLLAR LOSES MOMENTUM
"Investors are not making big bets following subdued manufacturing data in the United States and China and ahead of two major events later this week," Lee Jae-man, an analyst at Tong Yang Securities said, referring to meetings of central banks in Japan and Europe.
The Nikkei stock average tumbled as much as 2.7 percent to a one-month low before trimming some of the losses to fall 0.8 percent. The index logged its best quarterly performance in nearly four years in the first three months of 2013.
Both the Bank of Japan and the European Central Bank hold policy meetings later in the week. The BOJ is expected to announce fresh stimulus measures under its new leadership in line with Prime Minister Shinzo Abe's drive to reflate the economy.
The weak U.S. data weighed on the dollar, pushing it down to a one-month low of 92.57 yen. The euro fell 0.3 percent to 119.20 yen, its lowest since Feb. 26.
Benchmark 10-year U.S. Treasury yield inched closer to 1.8 percent after topping 2 percent in early March for the first time in almost a year. Ten-year Japanese government bond yield has declined from around 0.7 percent early in March to a near-decade low of 0.51 percent last week, before rebounding to around 0.56 percent.
"Expectations for an expansionary U.S. economy are weakening and long-term yields are falling, that's what is primarily driving the dollar lower," said Koji Fukaya, CEO and currency strategist of FPG Securities in Tokyo.
A weak yen trend which had been in place since last November had transformed into a strong dollar trend on signs of stronger U.S. growth earlier this year, but the latest soft indicator stoked concerns about such growth prospects.
"In such a context, markets were ripe for position adjustments, also as the second quarter may see effects of U.S. fiscal tightening taking a toll on the economy, even if the underlying recovery path remains firm," Fukaya said.
The waning of the dollar's relative outperformance and Cyprus at least avoiding bankruptcy were preventing the euro from falling through recent lows, although the currency faced more downside than the upside due to its wobbly fundamentals, traders said.
The euro inched up 0.1 percent to $1.2860, moving away from a four-month low of $1.2750 touched last week.
U.S. crude futures fell 0.4 percent to $96.69 a barrel while Brent eased 0.3 percent to $110.76.
London copper fell 1.2 percent to $7,452 a tonne, after touching a seven-month low earlier.
A weak dollar benefited bullion, keeping spot gold above $1,600 an ounce, but investors were loth to build positions too much ahead of Friday's payrolls data.
"I think sentiment is neutral. It can't break through $1,620-$1,625, but on the downside, we can say $1,590-$1,585 seem to be the floor," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.