CORRECTED-GLOBAL MARKETS-Shares, currencies tentative as attention shifts to

(Corrects reference to Nikkei move as Japanese markets are closed on Monday)

* Asian stock markets :

* Asian shares start in the red, Japan closed for holiday

* Lofty share valuations, fading U.S. stimulus major risks

* Fresh wave of coronavirus infections in Europe also a worry

* Currencies steady, U.S. dollar near 3-1/2 mth low on yen

By Swati Pandey

SYDNEY, Sept 21 (Reuters) – Asian shares held to tight ranges on Monday, as did currencies, as investors awaited developments on U.S. fiscal stimulus and coronavirus vaccines amid a resurgence of infections in Europe.

MSCI’s broadest index of Asia-Pacific shares outside Japan was a shade weaker, though it was not too far from a June 2018 peak at 568.84.

Australian and New Zealand shares both opened in the red while South Korea’s KOSPI was 0.1% up.

U.S. stock futures, the S&P 500 e-minis, were down 0.16%.

Japanese markets were closed for a public holiday.

“Attention is turning back to negotiations on supplementary fiscal stimulus and the forthcoming U.S. election,” ANZ analysts wrote in a note.

Coronavirus cases have now surpassed 30 million, casting a gloomy pall over prospects of a V-shaped economic recovery.

The biggest threat to global growth is a resurgent pandemic, with analysts fearing growth and inflation could surprise on the downside in the coming year. A lack of material development on U.S. stimulus package is also an overhang, they said.

Adding to worries, European countries from Denmark to Greece announced new restrictions on Friday to curb surging coronavirus infections in some of their largest cities, while Britain was reported to be considering a new national lockdown.

“Where is the inspiration for the equity bulls, I ask? We have diminishing prospects of fiscal stimulus, crazy valuations and a firm focus on an ugly U.S. election and COVID shutdowns, which suggest short-term risks for equities,” said Pepperstone strategist Chris Weston.

“Of course, the lack of early movement may be a red herring as the news, perhaps the Oracle/TikTok deal aside, can hardly be perceived as positive, but there has been no risk aversion expressed in FX, through this illiquid period.”

In currencies, the dollar held near a more than 3-1/2 month trough against the safe-haven yen at 104.52.

The euro was up 0.1% on the day at $1.1845 and has lost 0.76% in a month, while the risk sensitive Australian dollar was flat at $0.7289.

The British pound was up 0.1% at $1.2930.

That left dollar index, which tracks the greenback against a basket of six major rivals, barely changed at 92.956.

Currency strategists said dollar weakness may signal more volatility ahead of the Nov. 3 U.S. elections where Republican President Donald Trump will face off against Democratic challenger Joe Biden.

Pepperstone’s Weston expects the safe haven yen to remain well bid.

“In a world where real rate differentials increasingly drive capital flows, in developed market, FX Japan has the highest and positive real yields, and even more so when adjusting for hedging costs,” Weston said.

“This makes the JPY very attractive, especially against the GBP and USD, where real rates are not just negative but in the case of the Fed, they are actively seeking lower rates out.”

In commodities, U.S. crude slipped 0.46% to $40.92 a barrel. Brent crude fell to $42.99 per barrel. Gold was slightly lower, with spot prices at $1,949.6 per ounce.

(Editing by Sam Holmes)

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