* Spreadbetters predict narrow moves at European open
* S&P 500's third record close in 4 sessions supports sentiment
* Japan's Nikkei erases early gains in choppy trading
* Dollar edges down, pressured by low U.S. yields
By Lisa Twaronite
TOKYO, May 30 (Reuters) - Asian shares saw their gains unravel on Friday after rising on another record Wall Street close, while the dollar groaned under the pressure of slumping U.S. yields.
A similar session is expected in Europe, where shares are expected to tread water around recent highs. Financial spreadbetters predicted Britain's FTSE 100 to open flat; Germany's DAX to gain 5 to 6 points, or as much as 0.06 percent; and France's CAC 40 to fall 2 to 3 points, or as much as 0.07 percent.
"Trading has been a bit muted this week as traders are sitting on their hands in anticipation of the expected announcement of monetary easing from the ECB next week," said Jasper Lawler, market analyst at CMC Markets, in a note to clients.
Reuters reported earlier this month that the ECB is preparing a package of policy options for its June 5 meeting that includes cuts in all its interest rates.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down about 0.2 percent, but was still on track for a solid monthly rise, after it touched an intraday one-year high for the sixth time in the last seven sessions.
Japan's Nikkei stock average edged down 0.3 percent in choppy trading, breaking its longest winning streak since December, as investors booked profits after six sessions of gains. It still marked a weekly increase, and its first monthly gain in five months, supported by strong consumer price data.
Japan's core consumer prices jumped 3.2 percent in April from a year earlier, the fastest gain since February 1991 after a hike to Japan's national sales tax led to price increases.
"The figures suggest that we can expect rents to rise and companies' sales to increase, which will lead to increased capital spending," said Shigemitsu Tsuruta, senior strategist at SMBC Friend Securities. "Such expectations are lifting the mood, and we are bullish about the Japanese market in the second half of 2014."
But Japan's economic picture is not entirely rosy, as separate data showed household spending falling in April at its fastest rate in three years and industrial production slowing more than expected.
Data released overnight showed U.S. first-quarter gross domestic product fell a steeper-than-forecast 1 percent, but the drop was not enough to quash expectations of a second-quarter recovery. A decline in weekly jobless claims underscored a strengthening labour market.
The S&P 500 index posted its third record closing high in four sessions, as investors shrugged off the first quarterly contraction of the U.S. economy in three years and focused on the signs of a strengthening labour market.
The yield on benchmark 10-year Treasuries last traded at 2.466 percent, up from the U.S. close of 2.447 percent. But it was still not far from its lowest levels since last June, touched this week, as markets became convinced that the Federal Reserve won't begin raising rates any time soon.
"Ten-year yields in the U.S., Europe and Japan are near cyclical lows, on growing evidence of central banks' willingness to keep rates low for long, led by a dovish Fed and speculation on ECB easing next week," strategists at Barclays said in a note to clients.
The euro was steady at $1.3599 but not far from Thursday's three-month low of $1.3586.
The dollar index, which tracks the greenback against a basket of six major rivals, eased slightly to 80.477.
The yen was slightly higher against the dollar, which bought 101.58, down about 0.2 percent.
In commodities trading, spot gold was steady after a three-session losing streak at $1,255.66 an ounce, but was still headed for its biggest weekly drop in two months against the backdrop of an improving U.S. economy.
Copper slipped 0.3 percent to $6,863.25 a tonne, but was still poised for its biggest monthly rise of the year due to peak seasonal demand from China.
U.S. crude fell 0.1 percent to $103.46 a barrel but was still on course for its first monthly rise in three months, as tension in Ukraine and Libya supported futures throughout this month. Brent crude inched up about 0.1 percent to $110.02 a barrel. (Additional reporting by Ayai Tomisawa in Tokyo; Editing by Chris Gallagher & Shri Navaratnam)