GLOBAL MARKETS-Asia stocks gain, dollar struggles as Fed sets stage for rate cut

* MSCI Asia-Pacific index up 1%, Nikkei adds 0.5%
* European stock futures higher in early trade
* Fed chairman remarks revive some bets on aggressive rate
cut
* Dollar and U.S. Treasury yields sag after Powell's
comments
* Crude prices hit 7-week highs
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Shinichi Saoshiro
TOKYO, July 11 (Reuters) - Asian stocks advanced and the
dollar struggled on Thursday, after Federal Reserve Chairman
Jerome Powell reinforced prospects for a U.S. interest rate cut
later this month.
The pan-region Euro Stoxx 50 futures STXEc1 were up 0.43%,
Germany's DAX futures FDXc1 rose 0.42% and Britain's FTSE
futures FFIc1 gained 0.33% in early European trade.
In his first day of testimony before Congress on Wednesday,
Powell confirmed that the U.S. economy was still under threat
from disappointing factory activity, tame inflation and a
simmering trade war. Powell said the central bank stands ready to "act as
appropriate".
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 1%, while Japan's Nikkei .N225 added
0.5%.
The Shanghai Composite Index .SSEC edged up 0.3%, South
Korea's KOSPI .KS11 climbed 1.2% and Australian stocks .AXJO
advanced 0.6%.
U.S. stocks ended higher on Wednesday and the S&P 500 .SPX
briefly crossed the 3,000-point mark for the first time
following Powell's remarks. .N
"The markets had hoped for Powell to express dovish views
and they got what they wanted," said Masahiro Ichikawa, senior
strategist at Sumitomo Mitsui DS Asset Management.
"The focus going forward is U.S. data, such as tonight's
CPI, and whether the economy warrants a 50 basis point rate cut
this month."
A strong June U.S. jobs report released earlier this month
had curbed market expectations that the Fed could lower rates by
50 basis points (bps), and the markets had viewed a 25 bps cut
as a more likely option.
But the Fed chairman's cautious stance on the world's
largest economy helped revive some bets on heftier easing at its
next policy meeting on July 30-31.
The chance of a 50 bps cut rose to 27.6% from 3.3% on
Tuesday, according to CME Group's FedWatch tool.
Minutes from the Fed's last meeting in mid-June, however,
showed some policymakers felt there was not yet a strong case
for easing. The dollar index .DXY against a basket of six major
currencies was down 0.25% at 96.873 and extended losses from
Wednesday, when it fell back from a three-week peak of 97.588 in
the wake of Powell's comments.
"Although our U.S. economists have pencilled in a total of
50 bps of rate cuts for 2019, this does not change our near-term
view for moderate dollar gains within G10," wrote Daria
Parkhomenko, strategist at RBC Capital Markets.
The dollar would remain the highest yielding G10 currency
and that should lend it support, Parkhomenko added.
The greenback was down 0.5% at 107.960 yen JPY= , forced
off a six-week high of 108.990 scaled the previous day. It was
still some distance away from a six-month trough of 106.780 set
on June 25.
The euro EUR= nudged up 0.25% to $1.1278.
The Australian dollar AUD=D4 stretched the previous day's
rally, rising 0.2% to $0.6974 against the broadly weaker dollar.
The surge helped the Aussie move away from a 2-1/2-week trough
of $0.6910.
The 10-year U.S. Treasury yield US10YT=RR was 2 basis
points lower at 2.040% after dropping on Wednesday from a
three-week high of 2.113% following the Fed chief's
congressional testimony.
In commodities, U.S. crude oil futures CLc1 extended the
previous day's large gains to touch $60.83 per barrel, their
highest since May 23.
The contract had surged 4.5% on Wednesday after U.S. crude
inventories shrank and as major producers cut nearly a third of
offshore Gulf of Mexico production ahead of an expected storm.
O/R
Brent crude LCOc1 brushed a six-week high of $67.38 per
barrel and last traded at $67.23.
Spot gold XAU= rose to $1,426 an ounce, its highest since
July 3, as reinforced expectations for a Fed rate cut boosted
the non-yielding precious metal. GOL/

(Editing by Kim Coghill and Jacqueline Wong)