* Asian shares hit one-year high, Nikkei erases losses
* Global bonds rally on ECB easing hopes, Japanese yield hits 1-year low
* Gold hits 4-month low as dollar recovers
By Hideyuki Sano
TOKYO, May 29 Asian shares inched up to a one-year high on Thursday while global bond prices surged, pushing their yields to multi-month lows, supported by expectations of easier monetary policy from the European Central Bank.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15 percent, led by gains in Hong Kong and Singapore shares and hitting one-year highs for the fifth time in the last six sessions.
Japan's Nikkei share average gained 0.1 percent.
Spreadbetters see European shares opening mostly flat, with Germany's DAX seen unchanged after hitting a record high the previous day and Britain's FTSE 100 seen up to 0.1 percent higher.
On Wall Street, the S&P500 index snapped a four-session winning streak on Wednesday to end slightly below a record closing high hit on Tuesday, though it achieved an intraday record high.
Bond yields fell sharply as investors prepared for the ECB's expected easing. German 10-year Bund yields fell to a one-year low of 1.285 percent and periphery euro zone debt yields also tumbled, with Spanish debt yielding a record low of 2.823 percent.
"In the past, when share prices rise, bond prices fell. But that no longer applies. We are likely to see a combination of high share prices and low bond yields," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
An unexpected increase in German unemployment and a deceleration in the euro zone money supply on Wednesday reinforced expectations that the ECB will introduce further stimulus at its meeting on June 5.
ECB executive board member Yves Mersch ramped up the rhetoric, saying the next meeting could yield a combination of policies to tackle low inflation and low credit growth, but the timing of implementation could vary.
Measures being prepared by the ECB are likely to include cutting the deposit rate into negative territory - effectively charging banks to hold cash at the ECB overnight - and bank loans to increase lending to smaller companies.
"The ECB's easing is the biggest thing for markets for now. Nobody at this point clearly knows the ramifications of negative rates. In our dealing room, we have had heated debate but got no conclusion," said a proprietary trader at a major Japanese bank.
"But at least it's something that will help bring down long-term bond yields," he added.
The prospect of radical easing spilled over to other markets, with the 10-year U.S. Treasuries yield falling to 2.44 percent from 2.52 percent, hitting its lowest level in almost 11 months.
U.S. Treasuries were also supported by expectations that the Federal Reserve will be slow to raise rates even after it has stopped asset purchases.
The Japanese government bond yield broke out of months-old range to hit one-year low of 0.560 percent.
The prospect of ECB easing also pinned the euro near a 3 1/2-month low of $1.3587 hit on Wednesday. It last stood at $1.3607.
The British pound was also fragile, hit in recent days by a combination of slightly weaker economic data and inklings of nascent political risk to Britain's long-term status-quo after the European elections.
The pound fell to a one-month low of $1.6697 on Wednesday and last stood at $1.6723.
As a result, the dollar index edged near its April 4 peak of 80.599, last standing at 80.468.
The dollar eased to 101.65 yen as U.S bond yields came down, shrinking the dollar's yield advantage over the yen.
As the dollar gained, gold slipped to lowest level in almost four months, trading at $1,258.10 an ounce, licking its wounds after suffering its biggest daily fall since mid-December on Tuesday.
Elsewhere, London copper hovered near three-month high on dwindling global supply but iron ore fell to its lowest level since September 2012 on a deepening glut.
(Editing by Eric Meijer)