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SYDNE- Asian shares slipped to a one-week low on Monday and perceived safe haven assets, including the yen and gold, edged higher amid fears of rising inflation and a surge in coronavirus cases, while oil prices fell on oversupply worries.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1% for a second straight day of losses to 677.45, a level not seen since July 12. The index was on track for its biggest daily percentage drop since July 8.

Japan's Nikkei dropped 1.3% as did Australia's benchmark share index. South Korea's KOSPI was 1% lower, while Chinese stocks also started on the backfoot with the blue-chip index down 0.6%.

Oil prices stumbled more than 1% after an agreement over the weekend within the OPEC+ group of producers to boost output at a time when the outlook for demand is still cloudy. [O/R]

Global economic growth is beginning to show signs of fatigue while many countries, particularly in Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into some form of lockdown. The spectre of elevated inflation, which the market has long feared, is also haunting investors.

Economists at Bank of America downgraded their forecast for U.S. economic growth to 6.5% this year, from 7% previously, but maintained their 5.5% forecast for next year.

"As for inflation, the bad news is it's likely to remain elevated near term," they said in a note, pointing to their latest read from their proprietary inflation meter which remains high.

"The good news is ... we are likely near the peak, at least for the next few months, as base effects are less favourable and shortage pressures rotate away from goods towards services."

U.S. Federal Reserve Chair Jerome Powell has repeatedly said any inflation flare-up is expected to be transitory, indicating monetary policy will remain supportive for some while yet.

Yet, markets remain hard to convince.

Aviva Investors, the global asset management business of Aviva plc, expects rapid growth and inflation to put some upward pressure on long-term sovereign bond yields.

"As such, we prefer to be somewhat underweight duration, mainly through U.S. treasuries," said Michael Grady, head of investment strategy and chief economist at Aviva Investors. "Overall, we have a neutral view on currencies."

Action in the currency market was muted on Monday.

The dollar was mildly firmer against a basket of major currencies at 92.712.

Against the safe haven yen, the dollar was down 0.2% at 109.90, edging closer to the recent one-month trough of 109.52.

The euro was mostly flat at $1.1801.

The risk-sensitive Aussie slipped to $0.7372, the lowest since last December during early Asian trading.

Equity performance in recent days underscored investor nerves.

MSCI's all-country world index, a gauge of global shares scaled a record peak last week but finished it 0.6% lower. On Friday, the Dow closed down 0.9%, the S&P 500 slipped 0.75%, and the Nasdaq lost 0.8%.

These losses came despite stronger-than-forecast U.S. retail sales last week, which rose 0.6% in June, contrary to an expected decline.

Next on investors' radar is June quarter corporate earnings with Netflix, Philip Morris, Coca Cola and Intel Corp among companies expected to report this week.

Bank of America analysts forecast an 11% earnings beat, which they say would help refuel investor confidence in broader economic recovery and drive a rotation back into so called "value" stocks, which currently trade below what they are actually worth.

Elsewhere, gold, a perceived safe haven asset, inched up with spot prices at $1,815.4 an ounce.

Brent crude was down 90 cents to $72.69 a barrel. U.S. crude slipped 83 cents to $70.98 a barrel.

(Reporting by Swati Pandey; editing by Shri Navaratnam and Richard Pullin)