* MSCI Asia-Pacific index up 0.5%, Shanghai stocks rise
0.45%
* Benchmark U.S. yields hover near 3-year lows
* Sterling regains some ground after Johnson setback in
parliament
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Shinichi Saoshiro
TOKYO, Sept 4 (Reuters) - Asian stocks bounced on Wednesday,
led by Chinese markets after a report showed growth in the
country's service sector accelerating despite broader economic
headwinds, while the pound halted its decline on hopes a no-deal
Brexit may yet be averted.
The Shanghai Composite Index .SSEC added 0.45% while the
blue-chip CSI300 index .CSI300 gained 0.5% after activity in
China's services sector expanded at the fastest pace in three
months in August, according to a business survey. MSCI's index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS snapped two days of losses and gained 0.5%.
While some markets in Asia enjoyed gains, sentiment in the
wider region remained subdued amid worries about a global
recession.
Data on Tuesday showed the U.S. manufacturing sector
contracted in August for the first time since 2016 amid worries
about a weakening global economy and rising trade tensions
between China and the United States, the Institute for Supply
Management's (ISM) report on Tuesday showed. Australian stocks .AXJO lost 0.75% and Japan's Nikkei
.N225 was little changed.
According to CME's FedWatch tool, traders have almost fully
priced in a 25 basis point (bp) interest rate cut at the Fed's
Sept. 17-18 policy meeting while expectations for another 25 bp
reduction being implemented at the October meeting have risen to
61% from 53% over the past month.
The 10-year U.S. Treasury US10YT=RR yielded 1.474% after
stooping to 1.429% on Tuesday, its lowest since July 2016.
"As the decline in U.S. yields show, the markets will be
urging the Fed on to do more even though a September rate cut is
already priced in," said Masahiro Ichikawa, senior strategist at
Sumitomo Mitsui DS Asset Management.
POUND FINDS FOOTING FOR NOW
Sterling was last up 0.1% at $1.2097 GBP=D3 after falling
on Tuesday to $1.1959, the lowest level since October 2016.
The pound's bounce came after a British cross-party alliance
defeated Prime Minister Johnson in an effort to block a
"no-deal" Brexit, leading the premier to push for a snap
election. FRX/
The dollar index .DXY against a basket of six major
currencies stood at 98.938 after rising overnight to 99.37, its
highest level since May 2017, having lost some ground in the
wake of Tuesday's poor ISM reading.
The euro was steady at $1.0973 EUR= after sliding to a
28-month low of $1.0926 overnight as investors braced for a
potential interest rate cut by the European Central Bank next
week.
U.S. crude oil futures CLc1 rose 0.5% to $54.22 per
barrel, trimming some of the previous day's large losses. The
contracts had shed more than 2% on Tuesday after the weak U.S.
ISM data raised concerns about a weakening global economy. O/R
(Editing by Richard Borsuk and Sam Holmes)