GLOBAL MARKETS-Asia stocks brace for China test, oil on the slide
* China GDP, retail sales, industrial output to set tone
* Dollar bulls hear a hawkish hint from Fed's Yellen
* Oil prices lowest since early April as supply worries ease
By Wayne Cole
SYDNEY, July 16 (Reuters) - Asian stocks held steady on Wednesday as markets braced for a data deluge from China, while a slide in oil prices to the lowest in over three months was taken as a potential positive for global growth.
Chinese reports on gross domestic product, retail sales and industrial output are expected to confirm the economy stabilised in the second quarter after a shaky start to the year.
Estimates are the economy grew 7.4 percent last quarter, but anything less would likely pressure stocks in the region while crimping risk appetite globally.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat while Japan's Nikkei barely budged.
Wall Street had provided scant direction after investors gave a muddled reaction to testimony from Federal Reserve Chair Janet Yellen.
Yellen reiterated that the U.S. labour market was far from healthy and signalled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are "completely gone."
Yet bond investors fixed on a comment that rates could rise more quickly should the labour market continue to improve at a rapid pace, and shoved up short-term Treasury yields.
The latest U.S. economic news was generally upbeat as a solid rise in core retail sales in June combining with upward revisions to past months and led analysts to nudge up estimates for economic growth in the second quarter.
The Dow ended up a bare 0.03 percent, while the S&P 500 lost 0.19 percent and the Nasdaq dropped 0.54 percent.
High-flying social media and biotechnology shares took a hit after the Fed singled out the valuation of the sector as "substantially stretched."
JPMorgan Chase & Co and Goldman Sachs outperformed after reporting strong results. JPMorgan finished up 3.5 percent and was the biggest gainer on the Dow.
The contrast to Europe was stark as banking shares were sideswiped when Portugal's Banco Espirito Santo slumped 17.5 percent to a fresh record low. Traders blamed concerns over the bank's Angolan loan portfolio and the sale of a stake at a low price by the bank's founding family on Monday.
Also not helping was the ZEW survey showing German analyst and investor morale dropped in July for a seventh straight month to its lowest level since December 2012.
European shares ended down 0.4 percent, while the euro took collateral damage and fell to $1.3567.
The single currency also took a mauling from the pound which jumped when UK inflation surprised with a high reading, stoking speculation that interest rates would rise this year.
The euro sank to a two-year trough at 79.08 pence, while sterling made a six-year peak on the dollar at $1.7191 . The U.S. currency still managed to gain elsewhere and its index edged up to a three-week high at 80.409.
An early mover in Asian hours was the New Zealand dollar which slid to $0.8722 after the country reported softer-than-expected inflation.
In commodity markets, gold prices fell back to $1,295.65 an ounce and further away from last week's peak at $1,345.
Oil prices extended their recent decline as rising Libyan supplies and downbeat economic data from Europe sharpened concerns the global market was heading into a near-term glut.
World oil prices have been falling for three weeks now as traders shift their focus from violence in Iraq and Libya to weak global fundamentals.
Brent futures lost another 18 cents to $105.84 a barrel, having shed over a dollar on Tuesday. U.S. crude futures recouped a little of their losses to be up 22 cents at $100.18 a barrel. (Editing by Eric Meijer)