* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Nikkei rises 1% to highest since early March
* S&P 500 futures also up 1% in early trade
* Currencies steady, wary of U.S.-China trade news
* Oil up as supply falls, U.S. rigs hit all time low
By Wayne Cole
SYDNEY, May 26 (Reuters) - Asian shares crept ahead on Tuesday following an upbeat session in Europe and further gains in U.S. stock futures as investors looked past Sino-U.S. trade tensions to a re-opening world economy.
Japan's Nikkei .N225 led the way with a rise of 1% to its highest since early March when the economic impact of the coronavirus was just becoming clear.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.1% in early trade, while South Korea .KS11 rose 0.4%.
While Wall Street had been shut on Monday, E-Mini futures for the S&P 500 ESc1 were up just over 1% after EUROSTOXX 50 futures STXEc1 added over 2% on Monday.
European sentiment got a lift when a survey showed German business morale rebounded sharply in May as activity gradually returned to normal after weeks of lockdowns. helped offset the war of words between Washington and Beijing over trade, the coronavirus and China's proposals for stricter security laws in Hong Kong. tensions continue to simmer in the background, but equity investors appear more interested on the prospect of economies reopening around the globe," said Rodrigo Catril, a senior FX strategist at NAB.
"On this score, Japan ended its nationwide state of emergency, Spaniards have returned to bars in Madrid wearing masks and England will reopen some businesses on June 1."
Bond investors suspect economies will still need massive amounts of central bank support long after they reopen and that is keeping yields low even as governments borrow much more.
Yields on U.S. 10-year notes US10YT=RR were trading at 0.65% having recovered from a blip up to 0.74% last week when the market absorbed a tidal wave of new issuance.
The decline in U.S. yields might have been a burden for the dollar but with rates everywhere near or less than zero, major currencies have been holding to tight ranges.
The dollar was a fraction firmer on the yen on Monday at 107.75 JPY= but well within the 105.97 to 108.08 band that has lasted since the start of May.
The euro was all but flat at $1.0900 EUR= , having spent the month so far wandering between $1.0765 and $1.1017.
Against a basket of currencies, the dollar was idling at 99.788 =USD , sandwiched between support at 99.001 and resistance around 100.560.
Analysts at CBA felt the dollar could break higher should China-U.S. tensions actually threaten their trade deal.
"Although not our central scenario, if the U.S. or China were to withdraw from the Phase One deal, USD would sharply appreciate while CNH, AUD and NZD would decline," they wrote in a note to clients.
In commodity markets, gold edged down 0.1% to $1,727 an ounce XAU= . GOL/
Oil prices were supported by falling supplies as OPEC cut production and the number of U.S. and Canadian rigs dropped to record lows for the third week running. O/R
Brent crude LCOc1 futures rose 12 cents to $35.65 a barrel, while U.S. crude CLc1 gained 67 cents to $33.92.
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