* China iron ore futures fall sharply
Oil slides on supply glut concerns
* U.S. bond yields supported on rate hike view
By Saikat Chatterjee
HONG KONG, May 5 (Reuters) - Asian stocks declined for a third consecutive day on Friday as fresh falls in commodities raised concerns about the health of the global economy, though the euro bucked the broad weakness on receding concerns about France's presidential election.
Chinese stocks led regional losers, falling to a three-month low as concerns about tighter financial regulations weighed on banking shares while oil plays such as Petrochina and Sinopec tumbled on oil's retreat below the $45 per barrel mark.
In the latest attempts by Beijing to reduce leverage in the nation's banking system, regulators are turning their attention to capital rotation, breaches of arbitrage rules and illegal transactions, the official Shanghai Securities News reported on Friday, citing bank sources.
"Obviously regulations are tightening and a large number of regulatory measures will come in the second half of the year, thus hurting sentiment," said Zhu Qibing, an analyst with BOCI Securities.
While regulatory enforcement sprees are not new to China, investors fear there may be no let up in a new wave of tightening soon after President Xi Jinping last week made a rare speech on financial stability.
Xi called for increased efforts to ward off systemic risks to help maintain financial security, the official Xinhua news agency said.
MSCI's broadest index of Asia-Pacific shares outside Japan extended its decline to be down 0.8 percent on Friday and was trading at its lowest level since April 25.
European stock markets are set to follow in Asia's wake with key indices likely to open between 0.2 to 0.4 percent lower.
Other commodity-related plays such as the Australian stock market also fell with a benchmark index declining 0.8 percent. Big miners such as Rio Tinto Ltd, BHP Billiton Ltd and Fortescue Metals Group Ltd fell between 2.7 to 3 percent.
"The falls in commodities prices definitely tell us there is some kind of a moderation under way in the global economy and I would advise taking some money off the table at these levels," said Cliff Tan, East Asia head of global markets research at Bank of Tokyo Mitsubishi UFJ in Hong Kong.
On Friday, Chinese iron ore futures fell nearly 7 percent in opening trades after tumbling 8 percent on Thursday on concerns that global commodity demand may fall sharply in the face of record supplies. and
Oil plunged to five-month lows on Thursday amid record trading volume in Brent crude, as OPEC and other producers appeared to rule out deeper supply cuts to reduce the world's persistent glut of crude.
U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $44.14 per barrel at 0335 GMT, down $1.39 or 3 percent, after a more than 4 percent drop the previous session.
"The rout in markets is unlikely to turn around quickly," ANZ strategists wrote in a daily note. "Oil markets face further potentially bearish data, with the U.S. rig count likely to add to the bearishness."
The weakness in commodities washed over to stocks, countering some fairly solid earnings reports and some cautious optimism about U.S. President Donald Trump's reform plans after the U.S. House of Representatives passed a healthcare overhaul.
Traders also remained cautious ahead of Friday's U.S. government payrolls report, following March's underwhelming 98,000 figure. Economists on average expect 185,000 jobs were created in April.
Futures traders are pricing in a 79 percent chance of a June rate hike, up from 68 percent a week earlier, according to the CME Group's FedWatch Tool.
That hurt U.S. Treasury notes with yields on benchmark 10-year notes yielding 2.35 percent, near its highest since April 10, and up from 2.31 percent late on Wednesday.
The euro settled near a six-month high against the U.S. dollar hit in the previous session at $1.09850 after centrist Emmanuel Macron consolidated his position to win France's presidential race against anti-EU candidate Marine Le Pen.
Beyond Sunday's vote, traders will be looking to the European Central Bank for clues on any plans to reduce its bond-buying programme.
Prospects of higher U.S. interest rates dampened demand for gold with the safe-haven asset changing hands at $1,228 per ounce.
(Additional reporting by Luoyan Liu and Samuel Shen; Editing by Sam Holmes)