GLOBAL MARKETS-Asian shares turn up on Sino-U.S. trade truce hopes

* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* MSCI ex-Japan rises, gains led by China
* China-U.S. tentative agree to trade truce - SCMP
* Market pares bets for half-point Fed rate cut in July

By Swati Pandey and Wayne Cole
SYDNEY, June 27 (Reuters) - Asian shares crept higher on
Thursday following a media report the United States and China
have tentatively agreed to a truce ahead of a highly-anticipated
weekend meeting of the two nations' leaders in Tokyo.
The South China Morning Post (SCMP), citing sources, said
Washington and Beijing were laying out an agreement that would
help avert the next round of tariffs on an additional $300
billion of Chinese imports. On Wednesday, U.S. President Donald Trump said a trade deal
with his Chinese counterpart Xi Jinping was possible this
weekend though he was prepared to impose tariffs on virtually
all remaining Chinese imports if talks fail. "But the truce cake seems to have been baked," the SCMP
cited one of its sources as saying.
Hopes the world's two biggest economies would finally reach
an agreement were enough to cheer investors, sending MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS up 0.8%.
China led the gains with its blue-chip index .CSI300 up
0.9%. South Korea's KOSPI index .KS11 added 0.6% while Hong
Kong's Hang Seng .HSI and Japan's Nikkei .N225 jumped about
1.2% each.
The rally in Asia filtered through to other regions as well.
E-Minis for the S&P500 ESc1 climbed 0.4% in late Asian trading
while futures Eurostoxx 50 STXEc1 rose 0.3% and those for
London's FTSE FFIc1 added 0.1%.
"A truce would be a short-run positive for markets,"
analysts at Bank of America-Merrill Lynch wrote in a note. "But
investors will likely start to worry unless we move toward a
deal," they added.
"In the medium term, however, the trade war will likely
continue to erode business confidence, weighing on the United
States, China and regions caught in the crossfire, such as
Asia-Pacific and Europe."
The trade row has already rattled investors who have ditched
shares for the safety of bonds and gold this year. It has also
prompted the U.S. Federal Reserve to shift course as it paused
its rate tightenings and signaled a cut as soon as next month.
Many traders were still circumspect and expected the market
to remain in a narrow range until after the weekend meeting of
G20 leaders in Osaka, Japan, where Trump is also holding
bilateral talks with other nations.
"Focus continues to be on the G20 meeting with a story in
the SCMP...lifting the entire market, although the details
suggest nothing has actually been agreed yet," JPMorgan said in
a note.
"Overall it seems more likely that tariffs are hiked than
not, following the meeting, though the timing of this may be
confused by a desire for positive optics."

LESS THAN 50
Trump weighed into U.S. monetary policy on Wednesday,
accusing Fed Chairman Jerome Powell of doing a "bad job" and
"out to prove how tough he is" by not cutting interest rates.
Markets are convinced the Fed will indeed ease at its next
meeting in July, but had to scale back bets on a half-point cut
following cautious comments from various policy makers.
Futures FEDWATCH are 100% priced for a cut of 25 basis
points next month, and imply a 22% chance of 50 basis points.
The probability of a less aggressive Fed and expectations of
a Sino-China trade truce helped ease the selling pressure on the
U.S. dollar, which rose 0.2% to 96.348 .DXY on a basket of
currencies from a three-month trough of 95.843.
The dollar bounced modestly against the yen to 108.13 JPY=
and away from a low of 106.77. The euro likewise eased back to
$1.13505 EUR= from a top of $1.1412.
The dollar's gains took a little of the shine off gold,
which broke a six-session winning stretch and eased to $1,403.94
per ounce XAU= .
Oil prices ran into profit-taking, having gained overnight
on a larger-than-expected drawdown in crude stocks as exports
hit a record high and surprise falls in refined product
stockpiles. O/R
Brent crude LCOc1 futures eased 23 cents to $66.26, while
U.S. crude CLc1 lost 25 cents to $59.13 a barrel.

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(Editing by Sam Holmes & Shri Navaratnam)