* Global shares snap four-day losing streak on Monday
* Nikkei up 2 pct, Australia gain 1.2 pct, Korea 1.0 pct
* Trade war fears ease after backlash against Trump's plan
* Euro shrugs off inconclusive Italian election
By Hideyuki Sano
TOKYO, March 6 (Reuters) - Asian share regained some ground on Tuesday after U.S. President Donald Trump faced growingpressure from political allies to pull back from proposed steel and aluminium tariffs, easing investor worries about an imminent trade war.
The impact of Italy's inconclusive election results waslimited to a mild sell-off in Italian bonds and stocks, with theeuro gaining support from the creation of a coalition governmentin Germany.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent while Japan's Nikkei .N225 jumped 2.0 percent, a day after it hit a five-month low.
MSCI's broadest gauge of the world's stock markets .MIWD00000PUS snapped four-day losing streak on Monday bynotching up 0.67 percent. It added 0.16 percent in Asia onTuesday.
Wall Street shares have now recouped all the losses incurredafter Trump unveiled a plan to impose tariffs on steel andaluminium late on Thursday.
Leading Republicans, including House of RepresentativesSpeaker Paul Ryan and Representative Kevin Brady, turned up thepressure on Trump to rethink the plan on Monday. investors also saw the tariffs threats as a U.S.negotiating tactic to get a better deal on NAFTA.
Still, concerns over a trade war were far from dispelled,with Trump describing them as "easy to win", repeating hisearlier comments.
Trump was expected to finalise the planned tariffs later inthe week, although some observers familiar with the process saidit could occur next week.
The spectre of a trade war was not the only source ofconcerns for the stock market.
As the global economy steams ahead, investors have becomeincreasingly concerned that U.S. inflation, which has beensubdued since the 2008 financial crisis, could finally pick up.
While moderate inflation generally supports equityinvestors, rapid inflation, or fear of it, could prompt theFederal Reserve to hike rates faster, undermining the attractionof equities.
"Given the importance of bond yields to equity valuation,equity investors are affected by potential changes in bondyields just as much as fixed-income investors," said ColinMoore, Global Chief Investment Officer at Boston-based ColumbiaThreadneedle Investments.
"In the current environment, although inflation appears tobe increasing, it's still not likely to cause 10-year yields torise to levels that would be problematic for equities. Iestimate that problematic level to be a 4 percent yield."
U.S. bond yields rose as Wall Street shares rallied. The10-year U.S. Treasuries yield US10YT=RR rose back to 2.883percent from last week's low of 2.793 percent. A break of lastmonth's peak of 2.957 percent could trigger fresh selling inTreasuries, traders say.
In the currency market, the euro EUR= traded at $1.2333,extending its recovery from a seven-week low of $1.21545 hit onThursday.
The euro managed to recover losses made on Monday after twoanti-establishment leaders made early plays to govern Italyfollowing an inconclusive election where voters shuntedmainstream parties to the sidelines. none of the three main factions had enough seats togovern alone, President Sergio Mattarella is expected to openformal coalition talks in April, with early elections possibleif no accord is found.
"With any coalition that can be formed likely to have aright of centre bias, this ought to be bad for the euro but theGerman election result appears to have counterbalanced anydetrimental effects. We are holding to our pre-election stancethat this is not the time to be adding Italian risk," said PaulHatfield, Global Co-Chief Investment Officer at Alcentra, partof BNY Mellon Investment Management.
The dollar fetched 106.18 yen JPY= , crawling back from its16-month low of 105.24 touched on Friday on improved riskappetite.
The Canadian dollar CAD=D3 hit an eight-month low ofC$1.3002 per U.S. dollar as U.S. President Donald Trump usedproposed tariffs on steel and aluminium as a bargaining chip intalks to revamp NAFTA.
Crude prices rose with the U.S. stock market on forecastsfor robust oil demand growth and concerns that output from OPECproducers would grow at a much slower pace in coming years.
U.S. West Texas Intermediate crude futures CLc1 tradedalmost flat at $62.63 per barrel after 2.2 percent gain onMonday.
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