* Asian stocks open lower, yen holds ground
* Markets still wary after last week's Nikkei volatility
* UK, US markets closed for public holidays
By Ian Chua
SYDNEY, May 27 (Reuters) - Japan's Nikkei index slid 3.0 percent in early trade on Monday, following on from a 3.5 percent slide last week in breath-taking volatility that no doubt left many investors shaken.
"Last week's shock will probably last throughout this week," said Kenichi Hirano, a strategist at Tachibana Securities. "But the Japanese market's fundamentals in the mid-to-long term have not changed, so there still is upside in the longer term."
Other Asian stock markets got off to a cautious start on Monday, having suffered their biggest weekly drop in around a year as investors fretted about the possiblity of the Federal Reserve dialing down its stimulus programme as well as a slowing Chinese economy.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.3 percent. It skidded 2.6 percent last week to one-month lows, posting its biggest fall since May 2012.
Australia's S&P/ASX 200 index slipped 0.5 percent, but South Korea's KOSPI managed to eke out a 0.1 percent gain.
"Markets are starting to price the removal of unprecedented policy stimulus provided by the Federal Reserve following the global financial crisis," analysts at Barclays Capital wrote in a note.
"Investors have faced this situation several times in recent years, but... the edginess of markets to ebbs and flows in the data and Fed communications in recent months suggests this time is different. Market movements are saying the Fed's exit is now more 'when' than 'if'."
Supporting the view that the Fed may soon scale down its massive stimulus programme, data on Friday showed orders for US-made durable goods rose more than expected in April, a hopeful sign that a sharp slowdown in factory output could soon run its course.
That should be music to the ears of dollar bulls. Indeed, figures on Friday showed currency speculators increased bets in favour of the greenback to the highest since at least June 2008.
The dollar index, which tracks the greenback's performance against a currency basket, hit a three-year high last week before succumbing to a bit of pressure. It was last down 0.1 percent at 83.633.
Much of the excitement in currency markets last week centred on the yen as turbulence in the Nikkei prompted investors to book profits on bearish yen positions.
That saw the dollar recoil from a 4-1/2 year high of 103.74 yen set on May 22. It was last down 0.1 percent at 101.13 , not far off a two-week trough of 100.66 plumbed Friday.
Still, traders expect the yen's downtrend to remain intact after the Bank of Japan (BOJ) last month unleashed the world's most intense burst of stimulus.
On Sunday, Bank of Japan Governor Haruhiko Kuroda said the bank will be vigilant to any signs of overheating of asset prices or excessive risk-taking by financial institutions, adding that there were no signs of that now.
Commodity markets were subdued with UK and U.S. financial markets closed on Monday for public holidays. There is also little in the way of major economic news due out of Asia.