GLOBAL MARKETS-Asia stocks touch 29-month top, China blue chips at 5-year high

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei rallies, hopes new PM will stick with stimulus
* China service PMI strong, blue chips highest since
mid-2015
* Dollar near two-year trough as Fed commits to easy policy
* Risk of future inflation pushes up U.S. long-term yields

By Wayne Cole
SYDNEY, Aug 31 (Reuters) - Asian shares notched a 29-month
high on Monday as investors wagered global central banks would
keep topping up the policy punchbowl for years to come, while an
upbeat reading on China's service sector augured well for
recovery there.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.2% to reach its highest since March 2018,
bringing gains for the month so far to 5.1%.
Chinese blue chips .CSI300 firmed 0.7% to reach levels not
seen since mid-2015, while the yuan hit its highest on the
dollar in more than a year. Surveys showed Chinese manufacturing activity edged back a
tick to 51.0 in July, but services jumping a full point to 55.2
in a hopeful sign of reviving consumer demand. E-Mini futures for the S&P 500 ESc1 climbed another 0.4%,
while EUROSTOXX 50 futures STXEc1 added 0.8%.
Tokyo's Nikkei .N225 rallied 1.6% aided by news Warren
Buffett's Berkshire Hathaway BRKa.N had bought more than 5%
stakes in each of the five leading Japanese trading
companies. The Nikkei had dipped on Friday after Prime Minister Shinzo
Abe's resignation stirred doubts about future fiscal and
monetary stimulus policies.
Those concerns were eased somewhat by news Chief Cabinet
Secretary Yoshihide Suga, and a close ally of Abe, would join
the race to succeed his boss. A slimmed-down leadership contest
is likely around Sept. 14. Attention was now on a host of Federal Reserve officials
that are set to speak this week, kicking off with Vice Chair
Richard Clarida later Monday as they put more flesh on the
bank's new policy framework.
Fed Chair Jerome Powell boosted stock markets last week by
committing to keep inflation at 2% on average, allowing prices
to run hotter to balance periods when they undershot.
The risk of higher inflation in the future, assuming the Fed
can get it there, was enough to push up longer-term Treasury
yields and sharply steepen the yield curve.
Yields on 30-year bonds US30YT=RR jumped almost 16 basis
points last week and were last at 1.52%, 139 basis points above
the two-year yield. The spread was now approaching the June gap
of 146 basis points which was the largest since late 2017.
That shift was of little benefit to the U.S. dollar given
the prospect of short rates staying super-low for longer, and
the currency fell broadly.
Early Monday, the dollar index was off at 92.341 =USD and
just a whisker above the recent two-year low of 92.127. The euro
stood at $1.1902 EUR= , having climbed 0.9% last week.
Marshall Gittler, head of investment research at BDSwiss
Group, noted speculators had already built up record levels of
long positions in the euro which could work to limit further
gains.
"A truly crowded trade that will take more news to push
higher," he argued.
The dollar did steady a little on the yen at 105.60 JPY= ,
after dropping 1.1% on Friday before finding support in the
105.10/20 zone.
In commodity markets, the weakness in the dollar helped
underpin gold at $1,969 an ounce XAU= . GOL/
Oil prices steadied, having dipped on Friday after Hurricane
Laura passed the heart of the U.S. oil industry without causing
any widespread damage. O/R
Brent crude LCOc1 futures rose 27 cents to $46.08 a
barrel, while U.S. crude CLc1 gained 14 cents to $43.11.

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(Editing by Shri Navaratnam)