By Rae Wee

SINGAPORE, Feb 26 (Reuters) - A slide in U.S. Treasury yields dented the dollar on Wednesday, and oil prices also struggled as worries over the outlook for the world's largest economy grew, while Asia shares rose ahead of AI darling Nvidia's NVDA.O earnings later in the day.

U.S. copper prices HGc2 surged more than 4% while those elsewhere CMCU3 fell overnight after President Donald Trump on Tuesday ordered a probe into potential new tariffs on copper imports.

Data on Tuesday showed U.S. consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February - the latest in a string of surveys suggesting that businesses and consumers were becoming increasingly rattled by the Trump administration's policies.

Traders reacted by ramping up bets of more Federal Reserve rate cuts this year, with futures now pointing to nearly 60 basis points worth of easing priced in by year-end, up from about 40 bps a week ago. 0#USDIRPR

"We're not surprised that we're getting these weak consumer confidence numbers. What we are surprised about, though, is that we're getting them now, before consumers see the impact of tariffs," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia $(CBA)$.

U.S. Treasury yields came under pressure on Wednesday due to the heightened Fed easing bets, with the benchmark 10-year yield US10YT=RR languishing at a more than two-month low of 4.2830%.

The two-year yield US2YT=RR fell 1 bp to 4.0860%. US/

That in turn weighed on the dollar, particularly against the yen. The greenback last traded 0.13% lower at 148.81 yen JPY=EBS, after bottoming at an over four-month low in the previous session.

The euro EUR=EBS hovered near a one-month high at $1.0522, while sterling GBP=D3 was similarly within striking distance from a two-month top and last bought $1.2675.

"What we're seeing is the dollar weakens because of this soft economic data, but at some point, you hit a threshold where you get safe-haven flows into the U.S. dollar," said CBA's Capurso. "So if things get really, really bad in America, let's say the market starts pricing in a recession or something close to a recession, the U.S. dollar always goes up."

Fears of slowing U.S. growth also cast a shadow over the outlook for oil demand. O/R

Brent futures LCOc1 were up 0.34% to $73.27 a barrel having fallen more than 2% in the previous session, while U.S. West Texas Intermediate $(WTI)$ crude CLc1 rose 0.36% to $69.18 per barrel, reversing some of Tuesday's 2.5% slump.

Elsewhere, gold XAU= similarly ticked up on Wednesday owing to some safe haven flows, rising 0.1% to $2,918.50 an ounce. GOL/

ASIA SHARES UPBEAT

In stocks, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.63% on Wednesday, helped by a rally in Chinese markets.

Hong Kong's Hang Seng Index .HSI surged more than 2%, with the Hang Seng Tech index .HSTECH also rising 2.7%.

The CSI300 blue-chip index .CSI300 ticked up 0.54%, while the Shanghai Composite Index .SSEC gained 0.7%.

Chinese stocks have been on a tear over the past few weeks, driven by DeepSeek's AI breakthrough that reignited investor interest in China's technology capabilities.

However, the rally hit a speed bump earlier this week on news that the Trump administration plans to tighten semiconductor curbs on China and after the U.S. President signed a memorandum directing the Committee on Foreign Investment in the U.S. to restrict Chinese investments in strategic areas.

"It is recklessly complacent to brush off all tariff threats from the U.S. as a bluff that is meant as leverage," said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho.

"Especially not in China's case. Fact is, the U.S. intends to inflict significant industrial pain that compromises technological advantage and manufacturing clout or capacity."

Elsewhere, Japan's Nikkei .N225 fell 1.15%.

U.S. stock futures rebounded after a mixed session on Wall Street, with Nasdaq futures NQc1 rising 0.34%, while S&P 500 futures ESc1 gained 0.2%.

EUROSTOXX 50 futures STXEc1 similarly edged 0.37% higher, while FTSE futures FFIc1 tacked on 0.46%.

AI poster child Nvidia NVDA.O reports its quarterly earnings later on Wednesday, which could offer clarity on demand and justify the sector's lofty valuations.

Investor scepticism has grown over the billions that U.S. tech firms have channelled into AI infrastructure due to slow payoffs and breakthroughs at China's DeepSeek.

"Any signs of weakness in Nvidia's report could have outsized effects on investor sentiment towards AI stocks as a whole," said Saxo's global head of investment strategy Jacob Falkencrone.

"This earnings report isn't just about Nvidia ... it's about whether the AI revolution can maintain its breakneck pace."

(Reporting by Rae WeeEditing by Shri Navaratnam)

((Rae.Wee@thomsonreuters.com;))