* Lull in momentum as Wall Street scales record peaks
* MSCI AxJ heads for steady week, softest in a month
* Dollar bounce runs out of puff as U.S. labour market looks weak
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook and Chibuike Oguh
SINGAPORE/NEW YORK, Aug 21 (Reuters) - Asia's stock markets bounced on Friday following Wall Street's lead, but were set for their softest week in about a month as investors grapple with tepid economic data and lofty valuations after a huge rally that has wiped out coronavirus losses.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6% on Friday, though it is it poised to snap a four-week winning streak with a small weekly loss.
Japan's Nikkei .N225 edged up 0.3% but was headed for a 1.5% weekly drop, while a bond market selloff has also moderated in recent days as caution and summer-time lassitude weighs on the mood after the S&P 500 .SPX touched another record intraday peak.
Another surge in tech stocks took the Nasdaq .IXIC to a new all-time closing high. .N
"It's always going to be a little harder, once that's happened, to figure out where things are going," said ING's head of Asia research, Rob Carnell of the U.S. stock market.
In the absence of a disaster, he said, upward drift is probably the most likely direction, though perhaps with less conviction than the exuberance that has driven world stocks .MIWD00000PUS up 50% from March troughs.
"The news is just too mixed at the moment rather than outright catastrophically, apocalyptically bad. And so (investors are) going to keep on cautiously adding and things will carry on going up - and it can go on a long time like that."
S&P 500 futures ESc1 rose 0.2%, FTSE futures FFIc1 were steady and European futures STXEc1 were up 0.3%.
Overnight, clouds returned to the U.S. labour market outlook, with weekly jobless claims back over a million to put the total number of Americans on unemployment benefits at 28 million.
The Philadelphia Federal Reserve's business index also missed expectations and together the weak readings pushed down nominal U.S. yields and dragged on the dollar. Benchmark U.S. 10-year debt US10YT=RR yields were last steady at 0.6558%.
Investors are looking ahead to purchasing managers' index surveys across Europe, Britain and the United States - where steady, slightly positive, readings are expected - for the next broad gauge of the recovery's progress.
Japan's factory activity fell in August for a 16th month, a private business survey showed, casting doubt over manufacturers' hopes for a rapid recovery. BLUES
In currency markets, the U.S. dollar seems unable to shake downward pressure.
A bounce in the wake of the release of Federal Reserve minutes that fell short of dovish market expectations wore off fairly quickly and it looks headed for a ninth consecutive weekly loss against a basket of currencies =USD . FRX/
Sterling GBP= reversed losses against the dollar overnight to sit at $1.3122 and the risk-sensitive Australian dollar again sojourned above $0.72. The euro EUR=EBS was steady at $1.1864.
Currency traders are increasingly focused on an address next Thursday by Fed Chair Jerome Powell in case he reveals any details of an expected shift in policy emphasis - especially around inflation - that were absent in the minutes. Japanese yen JPY= inched up to 105.67 after an inflation miss supported real yields. The Thai baht THB= is tracking for its worst week in a month as investors begin to fret about political unrest.
Elsewhere, and perhaps indicating the low bar for impressing traders, markets interpreted the lack of a U.S. rebuff to a Chinese push for trade talks soon as a positive sign and the yuan CNH= hit a seven-month high of 6.8935. CNY/
In commodity markets, the prospect of production cuts had oil prices on track for a third straight weekly gain. Brent crude futures LCOc1 were last up 0.4% at $45.06 a barrel and U.S. crude future CLc1 rose 0.2% to $42.90 a barrel.
Gold XAU= was steady at $1,947.66 an ounce.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global assets
http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Emerging markets
http://tmsnrt.rs/2ihRugV MSCI All Country Wolrd Index Market Cap
http://tmsnrt.rs/2EmTD6j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>