GLOBAL MARKETS-Asian stocks fail to catch Wall St's Fed cheer as trade angst dominates

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Focus shifts back to G20 after Fed euphoria
* MSCI Asia-Pacific index inches up 0.1%
* Dollar struggles, government bonds buoyant post-Fed
* Middle East tensions support crude oil

By Shinichi Saoshiro
TOKYO, June 21 (Reuters) - Asian stocks struggled on Friday
to track Wall Street's exuberance about a possible U.S. rate cut
next month as anxiety over Sino-U.S. trade negotiations clouded
the investor mood in the region.
Also tempering appetite in Asia were fresh worries about
Middle East tensions, after Iran shot down a U.S. military
drone, raising fears of a military confrontation between Tehran
and Washington and pushing the crude oil price higher.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.1%. The index was up 4% on the week,
during which it brushed its highest level since May 8.
Japan's Nikkei .N225 was flat, capped by the yen's big
surge.
The S&P 500 .SPX hit a record high on Thursday after this
week's Federal Reserve meeting boosted expectations that the
central bank will cut interest rates as soon as next month to
keep the U.S.-China trade war from stalling economic growth. .N
The Fed signalled easing after the conclusion of its policy
setting meeting on Wednesday, saying it was ready to battle
growing global and domestic economic risks. "There is no doubt that this week's FOMC meeting outcome is
positive for the financial markets including those in Asia,"
said Kota Hirayama, senior emerging market economist at SMBC
Nikko Securities in Tokyo.
"That said, the FOMC alone won't be able to sustain Asian
equities indefinitely until some kind of solution can be worked
out for the U.S.-China trade war at the G20, since the region is
particularly vulnerable to the conflict."
Investors have pinned hopes on the United States and China
reaching some sort of compromise at the sidelines of the G20
summit in Japan on June 28-29.
In currency markets, the prospect of U.S. interest rates
being lowered put the dollar squarely on the defensive.
The dollar index .DXY against a basket of six major
currencies struggled near a two-week low of 96.567 brushed the
previous day. The index has fallen roughly 1% this week.
The greenback has fallen 1.1% versus the yen JPY= this
week and traded near a six-month low of 107.21 yen.
The euro EUR= was steady at $1.1295 after popping up to an
eight-day high of $1.1317 in the previous session. The single
currency was headed for a weekly gain of 0.75%.
With the Fed expected to ease policy soon, and with other
central banks such as the European Central Bank and the Bank of
Japan seen following in their wake, government bonds were on a
bullish footing.
The benchmark 10-year U.S. Treasury yield US10YT=RR surged
in price and its yield fell below 2% for the first time in 2-1/2
years on Thursday. It last stood at 2.016%.
The German 10-year bund yield DEYT=RR touched a record low
of minus 0.329% this week while Japan's 10-year yield
JP10YTN=JBTC fell to a near three-year trough of minus 0.185%
overnight.
Crude oil rose to three-week highs after Iran shot down a
U.S. military drone, raising fears of about fresh conflict in
the Middle East. O/R
U.S. crude oil futures CLc1 were up 0.58% at $57.40 per
barrel after rallying more than 5% the previous day.

(Editing by Sam Holmes)