* Tech, mining stocks lead broad Asia selloff
* MSCI AxJ index falls 1%; Hang Seng down 2.5%
* Powell vow for low rates drags on U.S. dollar
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, Feb 24 (Reuters) - Falling tech stocks in China and Hong Kong pulled Asia's markets sharply lower on Wednesday, as recent gains in U.S. Treasury yields put lofty equity valuations under pressure even as bond markets stabilised.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.8% and has lost 3.2% for the week so far.
Chinese blue chips .CSI300 fell 3% and the Hang Seng .HSI headed for its sharpest daily fall in nine months with a 3.4% drop that was further stoked by a rise in stock-trading stamp duty.
Japan's Nikkei .N225 fell 1% and mining shares dragged Australia's ASX 200 .AXJ0 down by 0.9%. S&P 500 futures ESc1 dropped 0.6%, while EuroSTOXX 50 futures STXEc1 fell 0.2% and Britain's FTSE futures FFIc1 fell 0.7%.
On Tuesday U.S. Federal Reserve Chairman Powell did not seem too peturbed by a selloff in Treasuries that has driven 10-year yields up by 40 basis points this year, telling Congress it was a statement on the market's confidence in the pandemic recovery.
But he cautioned that the economy remained "a long way" from employment and inflation goals and said that rates would stay low and bond buying would proceed apace until there was "substantial further progress". has done enough to dampen the upswing in bond yields, but he has not derailed it," said Vishnu Varathan, head of economics and strategy for Mizuho Bank in Singapore.
"Yields are consolidating and not retreating - and that's a result of this optimism that's driving bond yields which he hasn't pushed back against expressly."
Ten-year Treasury yields US10YT=RR fell about two basis points after his remarks and more or less held there through the Asia session to trade at 1.340%. Wall Street indexes recouped losses but the tech heavy Nasdaq .IXIC closed 0.5% lower.
VALUATIONS TESTED
Tech stocks are particularly sensitive to rising yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up.
February's rise in yields reflects not just higher inflation expectations but better growth forecasts too, and ten-year U.S. real yields US10YTIP=RR are on course for their sharpest monthly rise in more than four years. US/
"In the next couple of days the movement of the Nasdaq 100 will be pivotal, especially for China's big tech sector," said CMC Markets' analyst Kelvin Wong.
Nasdaq 100 futures NQc1 were down 1% late in Asia trade.
In foreign exchange markets, commodity-linked currencies forged ahead as prices of growth-sensitive raw materials from copper to crude oil traded around milestone highs.
The Australian AUD=D3 and Canadian dollars CAD=D3 hit three-year peaks of $0.7945 and C$1.2560 respectively. FRX/
The New Zealand dollar NZD=D3 also hit a three-year peak at $0.7384 after the central bank sounded upbeat on the economy even as it signalled - like Powell - that rates would be staying low. hit a 9-1/2 year high in London CMUC3 and Shanghai SCFcv1 while benchmark Brent crude futures LCOc1 slipped 0.4% to $65.10 a barrel after hitting a one-year high of $66.79 on Tuesday. U.S. crude futures CLc1 fell 0.8% to $61.17. O/R
Later on Wednesday traders' focus will turn to German GDP data, further testimony from Powell as well as speeches from Fed members Richard Clarida and Lael Brainard.
Price moves in a handful of hot assets popular with speculators - from bitcoin BTC=BTSP to Tesla TSLA.O and U.S. tech shares more broadly will also be closely watched as the rise in bond yields tests their stretched valuations.