* MSCI Asia-Pacific index up 1.1%, Nikkei gains 0.8%
* Equities up amid hopes for German stimulus, China rate
steps
* Safe-havens such as U.S. Treasuries, yen fall back
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Shinichi Saoshiro
TOKYO, Aug 19 (Reuters) - Asian stocks rode a Wall Street
rally on Monday and were also cheered by a decision from
China's central bank to alter the way it sets a key interest
rate benchmark, a move seen by analysts as reducing borrowing
costs for companies.
In early European trade, the futures for the pan-region Euro
Stoxx 50 STXEc1 were up 0.3% while those for German's DAX
FDXc1 and Britain's FTSE FFIc1 were each 0.5% higher.
The People's Bank of China (PBOC) on Saturday unveiled key
interest rate reforms to help steer borrowing costs lower for
companies and support a slowing economy caught in the grip of a
bruising trade war with the United States.
That move helped Chinese stocks lead regional gains on
Monday amid a broadly more upbeat investor mood. Hopes major
economies will seek to prop up slowing growth with fresh
stimulus have helped ease some of the recession fears unleashed
in markets last week.
"The decline in loan rates bodes well for China's credit
demand and growth outlook in the second half of 2019 to offset
the impact of the ongoing trade disputes," wrote Zhaopeng Xing
and Raymond Yeung, economists at ANZ.
"However, the reform is unlikely to have a stimulative
effect on China's property markets with the authorities still
insisting on tight regulations to prevent the crowding-out
effect from high home prices."
In China, the Shanghai Composite Index .SSEC rose 1.6%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 1.1%.
Over recent weeks, recession worries - triggered by an
inversion in the U.S. bond yield curve - have led to a shakeout
in financial markets. That has driven speculation of more
support from policy makers, including from the U.S. Federal
Reserve which last month cut rates for the first time since the
financial crisis.
Japan's Nikkei .N225 rose 0.8%.
Wall Street shares had rebounded on Friday after a report
that Germany's coalition government was prepared to set aside
its balanced budget rule in order to take on new debt and launch
stimulus steps to counter a possible recession. The yen JPY= , a gauge of risk sentiment due to its
perceived status as a safe haven, weakened for its third
successive session.
The Japanese currency last traded at 106.370 per dollar,
having pulled back from a seven-month peak near 105.000 reached
a week ago when events including unrest in Hong Kong and a
meltdown in Argentina's markets triggered a fresh bout of
anxiety in markets already shaken by the U.S.-China trade war.
"Sentiment in the markets appeared headed for a one-way
rout, but policy hopes following reports of the German stimulus
have helped halt the steady deterioration," said Ayako Sera,
senior market strategist at Sumitomo Mitsui Trust.
"As for steps by China, it needs to be understood that the
latest measures are geared towards markets which are already
regulated extensively. But China's latest move should
nevertheless provide the market with relief."
Elsewhere in currencies, the dollar index .DXY against a
basket of six major currencies hovered near a two-week high of
98.339 climbed on Friday. The index was supported as U.S.
Treasury yields bounced back from recent lows in the wake of
German stimulus hopes.
The 10-year U.S. Treasury yield US10YT=RR stood at 1.582%,
having pulled away from a three-year trough of 1.475% marked
last week in the wake of global slowdown fears.
Falling yields last week caused the two-year/10-year
Treasury curve to invert for the first since 2007, a phenomenon
widely regarded as a recession signal that puts the Federal
Reserve interest rate deliberations into focus.
"This week's main event is the Jackson Hole symposium and
Fed Chairman (Jerome) Powell's speech," said Junichi Ishikawa,
senior FX strategist at IG Securities in Tokyo.
Powell will deliver a speech on Friday at an annual meeting
of central bankers in Jackson Hole, Wyoming.
"What Powell has to say is in focus as the discrepancy
remains between what he said on interest rates and what the
markets have come to expect the Fed will do," Ishikawa said.
Powell said after the Fed lowered rates in July that the
easing was not the start of a series of cuts. But market
expectations for the Fed to cut rates by another 25 basis points
at the next policy meeting in September has topped 80%.
The euro EUR= was steady at $1.1088 while the Australian
dollar AUD=D4 edged up 0.1% to $0.6784.
Brent crude oil futures LCoc1 gained 1.15% to $59.31 per
barrel, following in the tracks of improved equity markets and
with a weekend attack on a Saudi oil facility by Yemeni
separatists providing further support. O/R
(Editing by Sam Holmes & Shri Navaratnam)