GLOBAL MARKETS-Japan shares hit 10-week peak, S&P 500 tests 3,000

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Nikkei rises 2% to highest since early March
* S&P 500 futures climb 1.4% to test 3,000 barrier
* China central bank says to strengthen economic policy
* Oil up as supply falls, U.S. rigs hit all-time low

By Wayne Cole
SYDNEY, May 26 (Reuters) - Asian shares forged ahead on
Tuesday while U.S. stock futures challenged a major chart
barrier as investors looked past Sino-U.S. trade tensions to
more stimulus in China and a re-opening world economy.
Japan's Nikkei .N225 led the way with a rise of 2% to its
highest since early March when the economic impact of the
coronavirus was just becoming clear.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 1.4%, while South Korea .KS11 rose 1.1%.
While Wall Street had been shut on Monday, E-Mini futures
for the S&P 500 ESc1 climbed 1.3% to test the 3,000 level.
EUROSTOXX 50 futures STXEc1 added 0.6% and FTSE futures
FFIc1 1.8%.
Chinese blue chips .CSI300 firmed 0.8% after the country's
central bank said it would strengthen economic policy and
continue to push to lower interest rates on loans. While largely reiterations of past comments, they helped
offset the war of words between Washington and Beijing over
trade, the coronavirus and China's proposals for stricter
security laws in Hong Kong. European sentiment also got a lift when a survey showed
German business morale rebounded in May as activity gradually
returned to normal after weeks of lockdowns.
"U.S.-China tensions continue to simmer in the background,
but equity investors appear more interested on the prospect of
economies reopening around the globe," said Rodrigo Catril, a
senior FX strategist at NAB.
"On this score, Japan ended its nationwide state of
emergency, Spaniards have returned to bars in Madrid wearing
masks and England will reopen some businesses on June 1."
Bond investors suspect economies will still need massive
amounts of central bank support long after they reopen and that
is keeping yields low even as governments borrow much more.
Yields on U.S. 10-year notes US10YT=RR were trading at
0.65% having recovered from a blip up to 0.74% last week when
the market absorbed a tidal wave of new issuance.
The decline in U.S. yields might have been a burden for the
dollar but with rates everywhere near or less than zero, major
currencies have been holding to tight ranges.
The dollar was a fraction firmer on the yen on Monday at
107.83 JPY= but well within the 105.97 to 108.08 band that has
lasted since the start of May.
The euro was a shade firmer $1.0910 EUR= , having spent the
month so far wandering between $1.0765 and $1.1017.
Against a basket of currencies the dollar was 0.2% lower at
99.788 =USD , but still sandwiched between support at 99.001
and resistance around 100.560.
Analysts at CBA felt the dollar could break higher should
China-U.S. tensions actually threaten their trade deal.
"Although not our central scenario, if the U.S. or China
were to withdraw from the Phase One deal, USD would sharply
appreciate while CNH, AUD and NZD would decline," they wrote in
a note to clients.
In commodity markets, gold edged up 0.1% to $1,731 an ounce
XAU= . GOL/
Oil prices were supported by falling supplies as OPEC cut
production and the number of U.S. and Canadian rigs dropped to
record lows for the third week running. O/R
Brent crude LCOc1 futures rose 34 cents to $35.87 a
barrel, while U.S. crude CLc1 gained 82 cents to $34.07.

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