By Tom Westbrook

SINGAPORE (Reuters) – U.S. stock futures bounced on Friday and selling pressure eased in Asian share markets after the U.S. Secretary of State agreed to a meeting with Russia’s foreign minister, raising hopes for a diplomatic solution to the East-West standoff over Ukraine.

jumped 0.5% on the news and Nasdaq futures rose 0.6%. MSCI’s broadest index of Asia shares outside Japan was last down 0.5%, but markets in Tokyo, Hong Kong, Sydney and Seoul all pared deeper morning losses.[.T][.HK][.KS][.AX]

U.S. Secretary of Antony Blinken has accepted an invitation to meet with Russian Foreign Minister Sergei Lavrov late next week provided Russia does not invade Ukraine, the U.S. State Department said.

“It’s better news than what we had yesterday,” said Kyle Rodda, an analyst at IG Markets in Melbourne. “But we’ve seen diplomatic talks go nowhere before, and the troops are still on the border, so risks remain.”

Wall Street had taken a dive overnight, with the dropping 2.1% and the Nasdaq off 2.9% – while gold shot to an eight-month peak – on renewed U.S. warnings of an imminent Russian invasion.

Investors fear a wider war as one of the deepest crises in post-Cold War relations plays out, with Russia wanting security guarantees, including Ukraine’s never joining NATO.

Overnight, safe-haven currencies such as the Japanese yen and Swiss franc climbed to two-week highs on the dollar and they retreated a little bit in Asia trade. [FRX/]

Treasuries likewise gave back some overnight gains, with the benchmark 10-year yield last up two basis points (bps) to 1.9876%. Two-year yields also rose two bps to 1.4909%. [US/]

Oil dipped and futures were last down 0.5% on Friday at $92.47 a barrel, more than 4% below Monday’s peak, and fell 0.5% to $91.26 a barrel. Gold dipped about 0.4% from its high to $1,889 an ounce. [GOL/]

RATES RACE

Concern about conflict in Ukraine comes with markets already rattled by a rates outlook that could hold as many as seven Federal Reserve increases in the year ahead.

St. Louis Fed president James Bullard on Thursday reiterated his call for the Fed funds rate to be raised to 1% by July to combat stubbornly high inflation and Fed funds futures price about a 1/3 chance of a 50 bps hike next month to begin.

Cleveland Fed President Loretta Mester said the pace of hikes will need to be faster than previous cycles.

“Markets have been particularly volatile recently and virtually everyone adjusted their Fed hike calls higher,” said NatWest Markets’ strategist Jan Nevruzi.

“The consensus seems to range between 5 (our view) and 7 (every meeting) hikes and I do believe the right number lays somewhere in between. Given the strong growth trend and elevated inflation, it wouldn’t be too surprising to see a hike at every meeting from now on,” Nevruzi said.

On Friday, Japan reported a fifth straight month of inflation, with energy prices posting their biggest annual rise in 41 years.

Elsewhere in currency markets the dollar held its bid and was firm at $1.1359 per euro and $0.7181 per .