* Spreadbetters expect mixed start in Europe; Alcoa earnings lend support
* MSCI-Asia pulls away from 3-yr high to 1-week low
* Wall Street losses cast deep shadow on Asian shares
* China’s yuan at 3-month high despite cooler inflation
By Lisa Twaronite
TOKYO, July 9 (Reuters) - Asian stocks extended losses to a one-week low on Wednesday after China’s consumer price inflation cooled slightly more than expected in June, pointing to lingering weakness in the economy.
Spreadbetters predicted mixed openings in Europe, where markets were likely to get some support after Alcoa Inc reported quarterly results late in the U.S. session that beat analysts’ expectations.
Later on Wednesday, the U.S. Federal Reserve will release minutes of its latest policy meeting, and European Central Bank officials including President Mario Draghi are scheduled to speak.
“Despite Alcoa kicking off earnings season to a good start and the expectations of a dovish FOMC statement this evening, the bulls still seem to be in disarray after the kicking they’ve taken over the last two days,” Capital Spreads trader Jonathan Sudaria wrote in a note to clients.
Financial spreadbetters expected Britain’s FTSE 100 to open down by 3-4 points, or 0.1 percent. But they predicted Germany’s DAX would open up by 21-23 points, or 0.2 percent, while France’s CAC was seen rising 9-13 points, or 0.2-0.3 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down about 0.8 percent, touching its lowest point since July 2 and pulling away from this week’s three-year highs. Japan’s Nikkei stock average ended down 0.1 percent, pulling off its lows as the yen’s gains unravelled.
China’s consumer price index (CPI) rose 2.3 percent in June from a year earlier, shy of the consensus forecast of 2.4 percent.
“The weaker CPI reading suggests inflation pressure is muted. It provides further room for policy easing in the future on the one hand, and also signals the weak demand from the domestic economy on the other hand,” said Wang Jun, an economist at the China Centre for International Economic Exchanges in Beijing.
Despite the price data, China guided its yuan towards a three-month high against the dollar in what traders said was possibly a political move as China and the United States started their annual Strategic and Economic Dialogue.
Before the Alcoa results, Wall Street sagged as investors turned cautious before the start of earnings season. The Standard & Poor’s 500 index shed 0.7 percent.
Upbeat June employment data last week has prompted some Wall Street economists to predict the U.S. Federal Reserve would raise interest rates earlier than previously thought.
But Minneapolis Federal Reserve President Narayana Kocherlakota said the labour market had a long way to go before the Fed reached its goals.
Kathy Lien, managing director of currency strategy at BK Asset Management, said in a note to clients: “Unlike other central banks who have recently expressed their desire to become more active, the Fed remains comfortable with their current course and has no desire to alter (the) market’s expectations.”
The benchmark 10-year Treasury yield stood at 2.564 percent in Asia, not far from Tuesday’s U.S. close of 2.565 percent.
Downbeat German economic data on Tuesday increased the appeal of relatively higher-yielding Treasuries, as it gave investors reason to believe the European Central Bank could take further easing steps to support the euro zone economy.
Germany posted larger-than-forecast falls in exports and imports in May, suggesting Europe’s largest economy is showing signs of weakness.
The euro was steady in Asian trade at $1.3618.
Against the yen, the greenback clawed its way to a slight gain on the day after touching a one-week low of 101.44 yen . It last stood at 101.63, up about 0.1 percent, which helped the dollar index stabilise around 80.150.
In commodities trading, U.S. oil inched up about 0.1 percent to $103.51 per barrel after slipping for eight straight sessions as global supply fears eased. Brent crude edged down to $108.93 a barrel.
Gold rose about 0.4 percent on the day to $1,324.00 an ounce as markets waited for the Fed minutes. (Additional reporting by Aileen Wang in Beijing; Editing by Kim Coghill, Eric Meijer and Alan Raybould)