* Asian equities fade as HSBC China PMI pulls back
* US, EU bonds supported by soft inflation, safe-haven bid
* Dollar loses ground to yen after failing to sustain post-jobs rally
By Wayne Cole
SYDNEY, May 5 Asian share markets took a turn lower on Monday after a survey of Chinese manufacturing disappointed, while the simmering conflict in Ukraine kept gold and bonds well bid.
Early gains evaporated when HSBC's final reading of its April PMI eased back to 48.1 from an initial 48.3, though it was still up a tick on March.
At least the services industry fared better, according to a separate official PMI released on Saturday. That measure rose to 54.8 in April from 54.5 in March, the National Bureau of Statistics said.
Investors seemed inclined to accentuate the negative and Shanghai shares slipped 0.75 percent while Taiwan eased 0.1 percent.
Australia's market reversed course to be down 0.2 percent , while MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent.
Market holidays in Japan and South Korea thinned trade, as did caution over the crisis in Ukraine.
Pro-Russian militants stormed a Ukrainian police station in Odessa on Sunday and freed nearly 70 fellow activists, two days after over 40 pro-Russian activists died in a blaze at a building they had occupied.
The tensions were cited as one reason for a rise in gold prices, which pushed up another $5 to $1,305.56 an ounce, after bouncing over $14 on Friday.
On Wall Street, the Dow ended Friday 0.28 percent lower, while the S&P 500 lost 0.13 percent and the Nasdaq 0.09 percent.
Still, all the indices were up for the week. The Dow and S&P both added 0.9 percent, and the Nasdaq 1.2 percent.
The soft finish on Friday was a disappointment given the strength of the U.S. payrolls report.
The increase of 288,000 in U.S. jobs was the largest since January 2012 and handily above forecasts. Unemployment dropped to 6.3 percent, though largely because of a steep fall in participation as more people left the labour force.
Crucially for bonds, there were scant signs of inflationary pressure in the report with average weekly earnings unexpectedly soft, just the latest evidence of muted wages growth.
The general absence of price pressures has helped longer-dated Treasuries rally hard in recent weeks with yields on 30-year paper diving to 10-month lows on Friday.
That in turn has sharply narrowed the gap between short- and long-term yields, a flattening of the curve that points to a marked lessening in inflation fears.
All of which is one reason investors still assume the Federal Reserve will be in no hurry to raise interest rates. The futures market generally has a first move pencilled in for the middle of next year and a slow-paced tightening thereafter.
"For the Fed, the recent data is strong enough to validate the status quo - ongoing $10bn per meeting tapering and the first rate hike in Q2 or Q3 next year," said analysts at Commonwealth Bank of Australia.
"But pointing in the other direction is the general patchiness of data in recent months, ongoing tensions in the Ukraine, excessive short positioning and perhaps a loss of bullish sentiment in U.S. equities."
The fall in U.S. yields has also undermined support for the dollar, which notably failed to sustain a post-jobs rally on Friday. Against the yen, the dollar drifted down to 101.88 , having retreated from a near one-month peak of 103.03 on Friday.
The euro was steady at $1.3869 having recovered from a low of $1.3812 on Friday. The dollar index also eased to 79.474. It had initially rallied to a high of 79.852 on Friday, only to then slide as deep as 79.469.
Among commodities, oil prices were mixed in slow trade. U.S. crude futures gained 4 cents to $99.80 a barrel while Brent crude eased 16 cents to $108.43. (Editing by Shri Navaratnam)