CORRECTED-GLOBAL MARKETS-Asian shares rise to 3-month highs, dollar waits for Fed

(Corrects Nikkei's milestone in bullet and paragraph 4 to
one-year high, not decade high)
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* MSCI ex-Japan rises for a third straight day
* Japan's Nikkei hits one-year high
* Share sentiment boosted by trade talks, earnings
* Eyes on U.S. Fed rate decision, Brexit developments

By Swati Pandey
SYDNEY, Oct 28 (Reuters) - Asian shares extended gains on
Monday to hit a three-month high as risk assets got a fillip
from hopes of a U.S.-China trade deal as soon as next month
while the dollar marked time as focus shifts to a U.S. rate
decision.
In early Asian trades, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS added 0.3% for its third
straight day of gains to 518.29, the highest since late July.
Chinese shares were a tad firmer with the blue-chip CSI 300
.CSI300 up 0.2%. Hong Kong's Hang Seng index .HSI jumped
0.7% while Australian shares climbed 0.1%.
Japan's Nikkei .N225 was also upbeat, rising 0.3% to a
one-year high.
The gains came after a positive session in U.S. and European
markets on Friday.
U.S. and Chinese officials are "close to finalising" some
parts of a trade agreement after high-level telephone
discussions on Friday, the U.S. Trade Representative's office
and China's Commerce Ministry said, with talks to continue.
U.S. President Donald Trump has said he hopes to sign the
deal with China's President Xi Jinping next month at a summit in
Chile.
The protracted trade war between the world's largest
economies has hurt manufacturing activity, exports and business
confidence globally while denting profits of many major
industrial firms.
Optimism that Beijing and Washington were finally close to
resolving their dispute led the S&P500 .SPX to surpass its
July 26 closing record of 3,025.86, though it ended a tad below
that level on Friday. The S&P 500's total return index .SPXT
posted an all-time high.
E-mini futures for the S&P 500 ESc1 started firm on
Monday, up 0.1%.
Strong results from companies including Intel INTC.O also
boosted sentiment in equities markets. More than 81% of U.S.
companies have beaten Wall Street expectations so far this
earnings season despite concerns about the trade war.
Investors next await earnings from the likes of Alphabet Inc
GOOGL.O , Apple AAPL.O , Facebook FB.O and Exxon XOM.N .
Activity later in the week will be dominated by the U.S.
Federal Reserve, which markets expect is all but certain to
lower interest rates at its Wednesday meeting.
The Bank of Japan meets on Thursday. On Friday, indicators
for Chinese and U.S. manufacturing will be released.
"The outcome of the FOMC policy meeting will most likely
draw the largest market reaction," said Richard Grace,
Sydney-based chief currency strategist at Commonwealth Bank.
"We also think the risk is the FOMC will articulate a
pause," for future rate decisions, Grace added.
"That means the 27.6% pricing for an additional 25 bps cut
in December will quickly evaporate, sending U.S. yields and the
USD higher."
In currencies, the dollar index .DXY was a shade firmer at
97.866 against a basket of six major currencies. The Japanese
yen was 0.1% lower at 108.75.
Sterling GBP= was last trading at $1.2816, a tad below
Friday's close.
The European Union agreed to London's request for a Brexit
deadline extension but set no new departure date. That gave
Britain's divided parliament time to decide on Prime Minister
Boris Johnson's call for a snap election. Earlier, sources told Reuters the 27 European Union
countries that will remain after Brexit hope to agree on Monday
to delay Britain's divorce until Jan. 31 with an earlier
departure possible. The euro EUR=D3 trod water too at $1.1077.
"It feels like the calm before a potential storm, where the
event risk heats up with political twists and turns, key
economic data and central bank meetings," said Chris Weston,
Sydney-based strategist at Pepperstone.
Oil prices eased after strong gains last week. O/R
U.S. crude CLcv1 slipped 7 cents to $56.59 a barrel, while
Brent LCOcv1 edged down 5 cents to $61.97.
Spot gold XAU= quoted at $1,504.92 an ounce.

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(Editing by Jacqueline Wong)