NEW YORK, March 11 ― Asian stocks extended their rebound from a two-month low today after a report on US consumer prices calmed concerns about inflation and lifted the Dow Jones Industrial Average to a record close.

An index of regional stocks excluding Japan rose 1.7 per cent, led by a 2.3 per cent surge in South Korea's Kospi, and was on track for its first three-day advance in three weeks.

China's Shanghai Composite rallied 1.9 per cent, helped by strong local lending data, while Japan's Nikkei 225 gained 0.5 per cent. E-mini futures for the US S&P500 rose 0.5 per cent.

Relative calm in the Treasuries market also helped risk sentiment, with the benchmark yield settling at around 1.5 per cent after shooting to a one-year high above 1.6 per cent last week as investors worried about the US economic recovery running too hot.

"The market took a bit of relief from this consolidation in rates,” said Masahiko Loo, a Tokyo-based portfolio manager at AllianceBernstein.

"The vaccine optimism is still there. People are coming back into the workforce. If you add everything up ― and the bond market is not being disruptive ― it's providing more incentive for investors to buy equities.”

Europe looked set to continue the global rally with Euro Stoxx 50 futures 0.2 per cent higher after the index touched a more than one-year top yesterday.

The European Central Bank sets its policy today and is likely to signal faster money printing to keep a lid on borrowing costs, although it will stop short of adding firepower to its already aggressive pandemic-fighting package.

Britain's FTSE futures rose about 0.4 per cent. MSCI's gauge of stocks across the globe gained 0.28 per cent.

The US Labour Department said its consumer price index rose 0.4 per cent in February, in line with expectations, after a 0.3 per cent increase in January. Core CPI, which excludes volatile food and energy components, edged up 0.1 per cent, just shy of the 0.2 per cent estimate.

While analysts largely expect a hike in inflation as vaccine rollouts lead to a reopening of the economy, worries persist that additional stimulus in the form of a US$1.9 trillion (RM7.8 trillion) coronavirus relief package set to be signed by US President Joe Biden could overheat the economy.

Investors will now eye an auction of 30-year debt today, seeking to cover massive shorts. A weak seven-year auction in late February helped fuel inflation concerns and sent yields higher.

"Rises in US bond yields appear to have subsided a bit after the 10-year yield has reached 1.5 per cent, even though many investors remain cautious before the Fed's policy meeting,” said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

"The Fed has ratcheted up its rhetoric on bond yields lately. The reality is, the economy is in a K-shaped recovery, with the service sector still in difficult conditions and the Fed would probably not want to let real interest rates rise.”

The dollar remained weaker following the economic data.

The dollar index was almost unchanged at 91.813, following a 0.2 per cent drop overnight.

The euro stood at US$1.19265 while the safe-haven yen eased to 108.685 per dollar.

Oil prices resumed their climb following two days of declines, after the Energy Information Administration reported a bigger-than-expected storage build.

US crude futures stood at US$64.97 per barrel, up 53 cents or 0.81 per cent. Brent crude futures were at US$68.45 per barrel, up 55 cents or 0.8 per cent. ― Reuters