GLOBAL MARKETS-Asian shares struggle for traction as Fed cut fails to lift confidence

* Fed cut fails to halt slide; S&P 500 drops 2.8%

* Australia down 1.3%, Nikkei flat

* Dollar slides vs Asian currencies

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook

SINGAPORE, March 4 (Reuters) - Asian shares wobbled on

Wednesday and bonds held gains, as an emergency rate cut from

the U.S. Federal Reserve did little to soothe investor fears

over the coronavirus's widening fallout.

The surprise 50 basis point cut came with commentary

highlighting the limits of monetary policy, and Wall Street

indexes fell sharply, gold surged and the dollar sank. .N

The yield on benchmark 10-year U.S. Treasuries, which falls

when prices rise, hit a once unimaginable low of 0.9060%. US/

In Asia, MSCI's broadest index of Asia-Pacific shares

outside Japan .MIAPJ0000PUS edged 0.2% higher, after easing

hopes drove gains on Tuesday.

Australia's S&P/ASX 200 index .AXJO fell 1.2% and Japan's

Nikkei .N225 was either side of flat in choppy trade. .T

E-mini futures for the S&P 500 ESc1 were volatile and last

traded 0.8% firmer.

The U.S. 10-year Treasury yield US10YT=RR drifted below

Wednesday's close to 0.9716% and the dollar pared losses after

touching a five-month low against the safe-haven Japanese yen

JPY= . FRX/

"We do recognise that a rate cut will not reduce the rate of

infection, it won't fix a broken supply chain; we get that," Fed

Chairman Jerome Powell told reporters at a press conference --

sending stocks from 2% gains back into the red. The Dow Jones industrial average .DJI , Nasdaq composite

.IXIC and S&P 500 .SPX each closed down close to 3%.

"Powell's comments have delivered a reality check for

markets, but also highlight the need for fiscal side to do

more," said National Australia Bank FX strategist Rodrigo

Catril.

"As the Fed Chair noted, the Fed does not have all the

answers."

More than 3,000 people have been killed by the coronavirus,

about 3.4% of those infected - far above seasonal flu's fatality

rate of under 1%.

It continues to spread quickly beyond the outbreak's

epicentre in China, with Italy overnight reporting a jump in

deaths to 79. Estimates of the economic cost are rising, too, since the

pathogen and the lockdowns applied to try and stop it spreading

have paralysed supply chains and all but frozen global travel.

S&P Global Ratings cut its U.S. growth forecast for a second

time on Tuesday and the Organisation for Economic Cooperation

and Development has warned the world is headed for its worst

downturn since the financial crisis more than a decade ago.

"The question here is whether a conventional interest rate

response is sufficient, or whether it requires also a fiscal

response," said Sameer Goel, chief strategist, Asia macro, at

Deutsche Bank in Singapore.

"It's not an economic shock, it's a shock driven by a

non-economic factor. It's still not clear how big the problem

ultimately is, or could be, and until you know that, it's hard

to know how much medicine to apply to it."

In currencies, the U.S. dollar fell across the board,

sending it to an eight-week low against a basket of currencies

=USD , while pushing the euro EUR= to an eight-week peak.

In Asian morning trade, the yen hit its highest against the

greenback since October, at 106.84 per dollar, before paring

gains to trade flat. The Australian dollar AUD=D3 advanced to

$0.6603.

Oil prices steadied, with Brent settling at $51.86 per

barrel LCOc1 and U.S. crude 0.4% firmer at $47.37 a barrel

CLc1 . Gold rose 0.4% to $1645.25 an ounce XAU= .

(Editing by Sam Holmes)