HONG KONG, June 7 (Reuters) - Gold and sovereign debt are set to build on solid overnight gains while Asian stocks are likely to slip on Wednesday as investors reduce risk before several major political and economic events later this week. With U.K. elections, an European Central Bank policy meeting where policymakers may take a less dovish stance, and former FBI director James Comey's Senate testimony on all set for Thursday, market participants will be wary of taking big positions.
MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.2 percent lower, retreating further from a two-year high hit on Monday. Early Asian markets such as Australia and Japan are pointed lower.
British Prime Minister Theresa May looks on course to increase her parliamentary majority in Thursday's election, an opinion poll showed on Tuesday, shortly after another survey suggested the race with the opposition Labour Party was neck and neck.
Major U.S. stock indexes fell between 0.23 percent and 033 percent on Tuesday.
The risk-off undertone pushed government bond prices up and yields lower, while propping up gold and the Japanese yen.
Yields on ten-year U.S. Treasury yields briefly fell to seven-month lows of 2.129 percent, the lowest since Nov. 10, before settling at 2.15 percent.
In currency markets, the dollar's weakness against major rivals reverberated across markets as shrinking U.S. bond yields further impeded a greenback already struggling in a climate of heightened political uncertainty.
Reports suggest former FBI director Comey plans to disclose on Thursday conversations in which U.S. President Donald Trump allegedly pressured him to drop his investigation into former National Security Adviser Mike Flynn, who was fired for failing to disclose conversations with Russian officials.
At its Thursday meeting the ECB may even discuss dropping some of its pledges to ramp up stimulus if needed, four people with direct knowledge of the discussions told Reuters last week.
The common currency held firm at $1.127 against the greenback.
Gold remained a firm investor favourite with the precious metal holding strong around the $1,294 per ounce line. It has gained nearly 7 percent in the past month. (Reporting by Saikat Chatterjee; Editing by Eric Meijer)