GLOBAL MARKETS-Fed cheer lifts Asian shares, leaves dollar on back foot

* Powell: Fed will react "as appropriate" to trade war risks
* Wall St stocks jump; 10-year Treasury yield off 21-month
low
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* European stocks seen opening flat to higher
* Dollar remains under pressure, hovers near 7-week low

By Tomo Uetake
Tokyo, June 5 (Reuters) - Asian shares advanced on Wednesday
after comments from Federal Reserve officials suggested a U.S.
rate cut this year was on the cards, boosting investor sentiment
and pushing the dollar lower.
The early momentum came from Wall Street's overnight rally,
helping lift MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS 0.4%, while Japan's Nikkei average
.N225 climbed 1.8%.
Chinese shares also rebounded, with the benchmark Shanghai
Composite .SSEC up 0.4% and the blue-chip CSI 300 .CSI300
rising 0.5%, while Hong Kong's Hang Seng .HSI advanced 0.5%.
European shares were expected to open flat to slightly
higher, with futures for Britain's FTSE FFIc1 opening flat and
Germany's DAX FDXc1 ticking up 0.1%.
Underpinning the better mood in markets, Federal Reserve
Chairman Jerome Powell on Tuesday dropped his standard "patient"
reference to any rate decision, instead saying the Fed would
respond "as appropriate" to the risks posed by a global trade
war and other recent developments. The comments were interpreted by investors as a clear nod to
a Fed easing. On Tuesday, Australia became the latest major
central bank to cut rates, following on from New Zealand last
month. India is also expected to ease policy at Thursday's
meeting for its third-straight rate cut.
"Powell gave the markets a reason to rally but I think it's
a short-covering bounce, rather than a trend reversal. It's just
the markets have priced in much of the bad news to come," said
Yasuo Sakuma, chief investment officer at Libra Investments.
On Wall Street, the Dow Jones Industrial Average .DJI , the
S&P 500 .SPX and the Nasdaq Composite .IXIC clocked their
biggest one-day gains in five months, with all three indexes
ending up more than 2% on Tuesday. .N
The rebound in stock prices also prompted U.S. bond yields
to step up from their recent lows, with the 10-year yield off
its 21-month nadir of 2.061% brushed earlier in the week. It
last stood at 2.100% US10YT=RR .
Japan's benchmark 10-year bond yield JP10YTN=JBTC fell to
minus 0.130%, its lowest level in nearly three years.
Uncertainties over how, or if, the United States will settle
its trade disputes with its key trade partners, notably China,
have kept many investors on edge.
U.S. Treasury Secretary Steven Mnuchin meets with People's
Bank of China Governor Yi Gang at the G20 finance leaders
meeting this weekend in Japan, a Treasury spokesman said on
Tuesday. Chinese President Xi Jinping said the country's economy is
stable, healthy and well placed to meet all risks and
challenges, according to a transcript published by the Xinhua
news agency. In the foreign exchange market, major currencies trod water
for now.
The dollar hit a seven week-low of 96.995 against a basket
of six major currencies .DXY overnight and was last quoted at
96.995, down a marginal 0.1% on the day. The euro fetched
$1.1269 EUR= , up 0.2%.
The pound recovered from a five-month low on Tuesday but
concerns about a disorderly departure from the European Union
meant gains were minimal, amid promises from U.S. President
Donald Trump of a "phenomenal" post-Brexit trade
deal. Sterling was last trading a marginally 0.1%
firmer at $1.272 GBP=D4 .
Other major currencies were relatively calm, with the
safe-haven yen still supported but demand was limited. The yen
firmed 0.1% against the dollar to 108.00 yen JPY= .
In commodity markets, oil prices resumed their slide on
Wednesday, dragged down by a surprise gain in U.S. inventories
and comments from the head of Russian state oil producer Rosneft
questioning the point of a deal with OPEC to withhold supplies.
O/R
In Asian trade, U.S. crude CLc1 retreated 0.9% to $52.98 a
barrel and Brent crude LCOc1 futures dropped 0.7% to $61.55
per barrel.

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(Editing by Jacqueline Wong & Shri Navaratnam)