(Correcting day of week in the first paragraph)
By Saikat Chatterjee
HONG KONG (Reuters) - Asian stocks slipped to two-month lows on Tuesday as weak oil prices weighed on sentiment while the dollar got a lift against its peers as the differences in policy directions between the world's top central banks became starker.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, its lowest since Mar. 11. Hong Kong and Chinese stocks led regional markets lower.
European stocks were expected to open slightly higher with spreadbetters picking Britain's FTSE 100 to open up 0.4 percent, Germany's DAX 0.5 percent and France's CAC 40 0.3 percent.
China's April consumer inflation and producer price data painted a mixed picture of deflationary pressures in the world's second largest economy.
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Expectations of further monetary policy easing had already been dented by strong March China data, but economists are divided over whether that was just a blip or a more sustainable trend.
"I think monetary policy will be kept steady with structural easing - targeted easing for some sectors," said Nie Wen, economist at Hwabao Trust in Shanghai.
Cuts in reserve requirement ratios (RRR) are likely although the People's Bank of China has been relying on other tools such as medium-term funds to inject liquidity, he said.
The moderate price data came after the official People's Daily quoted an "authoritative person" on Monday saying China may suffer from a financial crisis and economic recession if the government relies on too much stimulus.
Shen Weizheng, fund manager at Shanghai-based Ivy Capital, said that he was now much less bullish on stocks, interpreting the article as a sign that Beijing will rein in credit expansion after the first quarter's lending surge.
Noting the yen's fresh weakness, investors flocked to Japanese stocks, pushing them up 1.5 percent though the likelihood of weak first-quarter earnings kept broader sentiment in check.
"It will probably take a few months to price the bad news in, so the market is likely to stay weak for a while," said Masashi Oda, general manager at strategic investment department at Sumitomo Mitsui Trust Asset Management.
In the Philippines, the main index initially fell as tough-talking mayor Rodrigo Duterte looks almost certain to become the country's next president, but then reversed to be up 0.5 percent.
Wall Street put in a mixed performance overnight, undercut by tumbling oil prices amid expectations that U.S. crude inventories would again build to record highs.
In the currency markets, the dollar extended gains on Tuesday, pushing above 108.74 against the yen and 1.137 against the euro despite a broad-based pullback in U.S. Treasury yields.
With U.S. officials suggesting markets are under-pricing rate hikes and Tokyo warning it was prepared to step in to weaken the yen, traders are growing more bullish on the dollar.
"Don't underestimate the power of short covering," Kathy Lien, managing director at BK Asset Management, said in a note to clients.
While the dollar is "still a sell on rallies" against the yen, Lien said the currency could soar to 110 yen quickly if the 20-day simple moving average at 108.83 were broken.
"When a currency... squeezes higher quickly, causing investors to panic and abandon their positions, the rally could be sharp and aggressive particularly when positions are skewed so heavily in the opposite direction," she said.
In the wake of the yen's surge, Finance Minister Taro Aso on Monday said Tokyo is ready to intervene to weaken the currency if moves are volatile enough to hurt the country's trade and economy. Aso reiterated the message on Tuesday.
U.S. crude oil was down 0.3 percent in early Asian trade at $43.31 a barrel, after shedding 2.8 percent on Monday. Brent crude dropped 3.8 percent overnight to settle at $43.63 before edging higher.
The dollar's gains pushed gold prices lower with the precious metal falling to a 1-1/2 week low on Tuesday. Prices have flatlined after rallying in the last week of April.
(Additional reporting by Lisa Twaronite in TOKYO and China economics team; Editing by Richard Borsuk & Shri Navaratnam)