TOKYO (Oct 16): Asian shares were off session lows but still nursed losses amid a selloff in global equities on Thursday, as heightened concerns about world economic growth sent U.S. Treasury yields down and Japanese stocks tumbling.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.2 percent.

Shanghai shares bucked the downtrend and added 0.6 percent after Chinese bank lending data provided a regional bright spot. Lending beat expectations last month, a sign that demand for credit may be picking up, though a drop in China's foreign exchange reserves in the third quarter suggested ominous speculative money outflows.

Japan's Nikkei stock average tumbled 1.9 percent and touched a 4-1/2-month low, though it, too, pulled away from session lows as the dollar retook some ground lost to the yen.

"It's clear that people are avoiding risks," said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management, adding that investors had started to doubt whether U.S. economic recovery was strong enough to sustain the Japanese stock market.

S&P 500 e-mini futures edged up 0.3 percent, which might portend a more stable day ahead on Wall Street as investors await more U.S. data.

September industrial output and weekly jobless claims will be released later on Thursday and could paint a brighter picture than downbeat figures released in the previous session, which came after a recent spate of weak figures from China and Europe that raised fears about the health of the global economy.

U.S. retail sales and producer prices both dropped last month, a worrisome economic signal that helped fuel a sell-off on Wall Street as it quashed expectations the U.S. Federal Reserve would hike U.S. interest rates sooner rather than later.

The New York Fed's Empire State general business conditions index also plunged to 6.17 in October from September's 27.54, marking the weakest pace of manufacturing activity in New York state since April.

The S&P 500 briefly turned negative for the year on Wednesday, while European equities shed 3.2 percent to mark their biggest one-day slide in almost four years.

The grim mood sparked a safe-haven rally in U.S. Treasuries and pushed the yield on the benchmark 10-year note < US10YT=RR> as low as 1.865 percent, its deepest nadir since May 2013. It last stood at 2.090 percent in Asian trade.

The rally carried over to the Japanese government bond market, where the yield on the 10-year JGB fell to a 1 1/2-year low of 0.470 percent.

Only a month ago, fed funds futures had suggested traders priced in almost a 50 percent chance of a Fed rate increase as early as June 2015. But a jump in short-term U.S. interest rates futures on Wednesday implied traders anticipate the U.S. central bank would not move away from its near zero rate stance until the end of the first quarter in 2016.

The dollar's index against a basket of six major currencies stood at 84.956, down about 0.2 percent on the day and wallowing near levels last plumbed in September. Speculation of higher U.S. interest rates had pushed the index to a four-year high of 86.746 earlier this month.

Against the yen, the dollar edged up on the day to 106.16 yen, after dropping to a more than one-month low around 105.20 on Wednesday, while the euro inched lower to $1.2816 after rising as high as $1.2885 overnight, its highest level since last month.

"For those who were looking to buy the dollar, this was a very healthy correction," said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign exchange research firm.

Spot gold was steady at $1,240.38 an ounce, not far from a one-month high of $1,249.30 on Wednesday.

London copper added 0.4 percent to $6,668.50 a tonne after shedding 2.3 percent in the previous session, its biggest daily drop since March.

The dollar's sharp fall overnight lent modest support to oil prices overnight, with U.S. crude futures ending just 6 cents lower at $81.78. But the contract was down more than 1 percent in Asian trade at $80.77, while Brent crude shed 1 percent to $82.93.