* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Fed cuts rates as expected but signals pause
* BOJ keeps policy on hold, changes forward guidance
* Policymakers struggle to deal with risks to growth
By Stanley White
TOKYO, Oct 31 (Reuters) - Asian shares jumped on Thursday to
a three-month high and the dollar fell broadly after the Federal
Reserve cut interest rates as expected and U.S. Treasury yields
declined.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.53% to the highest since July 30. Hong
Kong shares .HSI rose 0.93%, while Japan's Nikkei stock index
.N225 rose 0.43%.
The pan-region Euro Stoxx 50 futures STXEc1 were up 0.08%,
German DAX futures FDXc1 added 0.1%, while FTSE futures
FFIc1 edged down 0.02%.
U.S. Treasury yields slipped after the rate cut, but Fed
Chairman Jerome Powell signalled additional trims are unlikely
because there are several areas of strength in the U.S. economy.
The yen JPY= held onto gains versus the dollar after the
Bank of Japan keep its ultra-easy monetary policy in place as
expected and changed its forward guidance to more clearly signal
the future chance of a rate cut. 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."
U.S. stock futures ESc1 edged 0.01% lower on Thursday
after the S&P 500 rose 0.33% to close at a record high on
Wednesday for the second time in three trading sessions.
A positive mood on Wall Street carried over to Asian
equities, except for Australian shares .AXJO , which fell 0.39%
after weak earnings from Australia and New Zealand Banking Group
ANZ.AX .
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 1.7803% on Thursday, while the two-year yield US2YT=RR
eased slightly to 1.6257%.
The dollar index .DXY against a basket of six major
currencies fell 0.31% to 97.346, extending declines from
Wednesday.
News that Chile will not host the Asia-Pacific Economic
Cooperation (APEC) summit in mid-November was one reason the
dollar was dented - as the market has been expecting the United
States and China to sign a partial trade deal there.
On the brighter side the head of a Chinese government-backed
trade group said Beijing could remove extra tariffs to allow
importers to buy up to $50 billion worth of U.S. farm products.
The greenback fell to 7.0417 yuan CNY=CFXS in onshore
trade, at one point falling to its lowest since Aug. 19.
The yen rose 0.16% to 108.68 per dollar JPY=EBS , holding
onto gains after the BOJ left policy unchanged as expected.
Traders will focus on BOJ Governor Haruhiko Kuroda's press
conference later on Thursday to gauge how he assesses the risks
posed by the U.S.-China trade war and Brexit. Optimism that Washington and Beijing will sign a preliminary
agreement to call a truce to their trade war was 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 erased loses and rose on
Thursday after as a massive buildup in U.S. crude stock piles
triggered a decline in futures on Wednesday.
U.S. crude CLc1 erased loses and rose 0.18% to $55.16 a
barrel. Brent crude LCOc1 rose 0.36% to $60.83 per barrel.
U.S. Fed funds rate https://tmsnrt.rs/2owFPQF
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