GLOBAL MARKETS-Asian shares climb to 3-month high, currencies mark time

(Adds European shares and quotes, updates prices throughout)
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* MSCI ex-Japan rises for a third straight day
* Japan's Nikkei hits 1-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 rose to a
three-month high on Monday, as risk assets got a fillip from
hopes of a trade deal and strong U.S. corporate earnings, while
major currencies marked time as focus shifted to a Federal
Reserve rate decision.
European shares are expected to edge up, with pan-European
Euro Stoxx 50 futures STXEc1 and German DAX futures FDXc1
traded up slightly ahead of European trade.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 0.5% for its third straight day of gains
to the highest since late July.
Leading the gains were Chinese and Hong Kong shares. The
CSI300 .CSI300 of blue-chip mainland shares were up 0.6% and
Hong Kong's Hang Seng index .HSI jumped 1.0%.
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.
"Up until now, uncertainties from the U.S.-China trade have
held companies from spending and hiring. But if they will come
to a deal, that will mark a major turning point in economic
sentiment," said Tatsushi Maeno, senior strategist at Okasan
Asset Management in Tokyo.
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 0.15%.
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 flat at 97.817
against a basket of six major currencies. The Japanese yen was
little changed at 108.73 to the dollar JPY= .
Sterling GBP= was last trading at $1.2822, 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 $1.1083.
"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 14 cents to $56.52 a barrel,
while Brent LCOcv1 edged down 12 cents to $61.90.
Spot gold XAU= quoted at $1,506.3 an ounce.

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