GLOBAL MARKETS-Asia stocks up but investors worry about rate hikes, China lockdowns

By Kanupriya Kapoor

May 25 (Reuters) - Asia stocks rose on Wednesday even as central banks piled into aggressive rate hikes to battle soaring inflation and left investors worried about slower global growth.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.72%, with Australian shares up 0.72%, Seoul adding 0.84% and Taiwan advancing 1.07%.

Hong Kong's Hang Seng and China's main indexes also traded higher, while Japan's Nikkei share average slipped 0.04%.

European markets also looked set for a firmer open, with pan-European futures up 0.93% and FTSE 100 futures rising 0.88%.

The U.S. dollar index =USD - which measures the currency against six major rivals - rebounded 0.16% to 101.92, a level not seen since April 26. Meanwhile the kiwi hit a three-week high of $0.65 after the New Zealand central bank raised rates by an aggressive 50 basis points and signalled more to come.

Overnight, Wall Street reeled from weak housing and manufacturing data, while U.S. central bankers backed two more big interest rate hikes as early as June and July to fight 40-year-high inflation.

The Nasdaq Composite dropped 2.35% and the S&P 500 lost 0.81%.

New home sales in the U.S. fell 16.6% month-on-month in April, the largest decline in nine years, sending U.S. Treasuries yields down to one-month lows as investors turned once again to safety. The benchmark 10-year note was at 2.766% and the 2-year yield was at 2.522%.

But Atlanta Fed President Raphael Bostic warned headlong rate hikes could create "significant economic dislocation" and was among a handful of Fed policymakers who favour reducing the pace of rate hikes later in the year if inflation cools.

Investors in Asia remain similarly nervous about growth being impacted by the effects of persistent Chinese COVID-19 lockdowns, which threaten to undermine recent stimulus measures in the world's second-largest economy.

"In Asia, investor debate centers on whether or not China's easing policies are sufficient to offset downward pressures," Stephen Innes of SPI Asset Management said in a note.

"Fiscal multipliers will be minimal in an economy where economic activity have slowed sharply. Moving beyond mobility restrictions in short order is a pre-condition, but not a guarantee, for an Asia-led economic recovery."

Gold prices dipped 0.19% to $1,862.27 per ounce, having risen to their highest in two weeks on Tuesday, as the greenback gained.

Oil prices climbed more than 1% on the prospect of tight supplies. U.S. crude futures rose to $111.05 a barrel, and Brent rose to $114.86.

(Editing by Kim Coghill)