NZ dollar soft as stocks struggle- bonds firm

WELLINGTON, Nov 19 (Reuters) - The New Zealand dollar NZD= steadied just off three-week lows on Wednesday, but sentiment remained weak as Asian stocks edged lower and investors showed little enthusiasm for riskier assets.

Local stocks failed to follow a mildly positive lead from Wall Street, sinking as fears of a global recession dominated.

"We're pretty much at a stalemate. The typical lockstep price action with equities has continued but in the absence of any lows in U.S. equities we've settled into a range," said RBC Capital Markets senior currency strategist Sue Trinh.

At 0400 GMT the kiwi was at $0.5499/04 compared with $0.5500/05 in late local trade on Tuesday. The kiwi fell as far as $0.5463 in offshore trade, its lowest since Oct. 28, but recovered as U.S. stocks swung back into positive territory.

Trinh said the kiwi was stuck in a broad $0.5450-$0.56 range, although the longer-term outlook was for it to head lower ahead of an expected rate cut by the central bank when it next meets on Dec. 4.

A poll had a majority of analysts predicting a 100 basis point cut to the 6.5 percent official cash rate, with the others going for a 75 basis point easing.

Data on Wednesday showed producer prices rose at a slower rate in the third quarter, and with inflation now seen on a downward path no-one saw the result preventing further interest rate cuts.

New Zealand debt extended the week's gains on ongoing safe-haven demand. The yield on the benchmark 10-year bond NZ10YT=RR, which moves inversely to its price, closed 12 basis points lower at 5.62 percent. (Reporting by Adrian Bathgate)