Asia stocks rally, bond yields fall as investors assess Fed outlook

By Kevin Buckland

TOKYO (Reuters) - Asian equities rallied on Thursday, while bond yields slid, as investors weighed cooling U.S. inflation against a more hawkish posture by the Federal Reserve.

Japanese shares underperformed and the yen inched down against the dollar, as the Bank of Japan began its two-day policy meeting.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.9%, with Taiwan stocks jumping 1.7% and Hong Kong's Hang Seng up nearly 1%, buoyed by the U.S. S&P 500 and tech-heavy Nasdaq closing at record highs overnight.

U.S. futures pointed to further gains, with S&P futures up 0.2% and Nasdaq futures adding 0.6%.