* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Fed cuts rates as expected but signals pause
* BOJ likely to keep policy on hold on Thursday
* Policymakers struggle to deal with risks to growth
By Stanley White
TOKYO, Oct 31 (Reuters) - Asian shares rose on Thursday and
U.S. stock futures edged higher after the U.S. Federal Reserve
cut interest rates as expected to keep economic expansion on
track.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.2%. Japan's Nikkei stock index .N225
rose 0.41%, but Australian shares .AXJO fell 0.24%.
U.S. Treasury yields extended declines in Asia after the
rate cut, but further declines may be limited as Fed Chairman
Jerome Powell signalled additional rate cuts are unlikely
because there are several areas of strength in the U.S. economy.
The yen JPY= held steady versus the dollar before a Bank
of Japan policy meeting later on Thursday. The BOJ is expected
to keep its ultra-easy monetary policy in place, but the
decision could be a close call.
Debate at the Fed and the BOJ highlights the struggle that
many central banks are facing.
The U.S.-China trade war and Britain's divorce from the
European Union have increased uncertainty, but central banks are
somewhat reluctant to ease policy aggressively because interest
rates are already very low in many major economies.
"The biggest thing that stands out is stocks look stronger
after the Fed," said Tsutomu Soma, general manager of fixed
income business solutions at SBI Securities in Tokyo.
"Risks like U.S.-China or Brexit haven't been resolved
completely, but the markets are starting to look beyond these
risks. The BOJ is likely on hold, so it will be difficult for
currencies to react."
U.S. stock futures ESc1 nudged 0.07% higher on Thursday in
Asia after the S&P 500 rose 0.33% to close at a record high on
Wednesday for the second time in three trading sessions.
The Fed lowered its policy rate to 1.50%-1.75%, but dropped
a previous reference in its statement to "act as appropriate" to
sustain the economic expansion. In his news conference, Powell listed several reasons why he
feels the economy is doing well, such as robust consumer
spending, strengthening home sales, and healthy asset prices.
The yield on benchmark 10-year Treasury notes US10YT=RR
fell to 1.7838% in Asia on Thursday, while the two-year yield
US2YT=RR eased slightly to 1.6076%.
The dollar index .DXY against a basket of six major
currencies fell 0.22% to 97.427, extending declines from
Wednesday.
The yen was little changed at 108.80 per dollar JPY=EBS as
traders awaited the outcome of the BOJ meeting.
Japan's central bank may trim its consumer price forecasts
but leave policy unchanged due to hopes that progress in scaling
back a U.S.-China trade dispute will give it room to save its
dwindling policy tools. Optimism that Washington and Beijing will sign a preliminary
agreement to call a truce to their 16-month trade war was also a
factor behind the Fed's decision to signal that further rate
cuts are on hold, highlighting the importance of trade talks to
global monetary policy. In the energy market, oil futures extended declines on
Thursday as a massive buildup in U.S. crude stock piles
reinforced concerns about oversupply in the world's energy
markets.
U.S. crude CLc1 fell 0.29% to $54.90 per barrel.
Crude inventories USOILC=ECI , excluding the Strategic
Petroleum Reserve SPR, rose 5.7 million barrels in the week to
Oct. 25, the Energy Information Administration said on
Wednesday.
This blew past analysts' expectations for a 494,000-barrel
build.