GLOBAL MARKETS-Asia shares touch 3-month top, cautious on Fed

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Nikkei hits one-year high as S&P 500 reaches record
* Trump talks up progress on China trade
* EU grants Britain three-month Brexit extension
* Market sees Fed cutting rates, cautious on outlook

By Wayne Cole
SYDNEY, Oct 29 (Reuters) - Asian shares crept to a
three-month peak on Tuesday after Wall Street hit all-time highs
amid hopes of progress in Sino-U.S. trade talks and for another
dose of policy stimulus from the Federal Reserve this week.
Japan's Nikkei .N225 led the way with a rise of 0.4% to
reach ground last trod a full year ago, while Shanghai blue
chips .CSI300 dithered either side of flat.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS nudged up 0.2% and touched its highest since
late July. E-Mini futures for the S&P 500 ESc1 extended their
gains by 0.1% and EUROSTOXX 50 futures STXEc1 dipped 0.1%.
U.S. President Donald Trump said on Monday he expected to
sign a significant part of a trade deal with China ahead of
schedule but did not elaborate on the timing. The U.S. trade representative also said the U.S. was
studying whether to extend tariff suspensions on $34 billion of
Chinese goods set to expire on Dec. 28 this year. "The market appears to be interpreting the improvement in
trade talks as a positive sign that the U.S. will suspend its
planned tariffs on $160 billion of Chinese imports due to take
place in December," said Rodrigo Catril, a senior FX strategist
at National Australia Bank.
"This is a big assumption as talks could easily fail again
if both parties don't find a compromise."
On Wall Street, the S&P 500 .SPX gained 0.56% to score a
record closing peak, while the Dow .DJI rose 0.49% and the
Nasdaq .IXIC 1.01%. .N
Microsoft Corp MSFT.O climbed 2.46% after winning the
Pentagon's $10 billion cloud computing contract, beating out
Amazon.com Inc AMZN.O . Google parent Alphabet Inc GOOGL.O slipped in late NY
trade after missing analysts' estimates for quarterly profit
even though revenue growth topped expectations. ON THE FED
The embrace of risk left bonds out in the cold, and yields
on two-year Treasury notes US2YT=TWEB hit four-week highs at
1.667%. US/
Bond investors are still looking forward to a likely rate
cut from the Federal Reserve on Wednesday, though they also
suspect officials might signal caution on moving yet further.
"Our base case is for the Fed to cut again in December,
although Fed communication may sound marginally more hawkish
this week and we expect the FOMC to keep the door open for
another easing this year rather than signal it explicitly,"
wrote analysts at JPMorgan in a note.
The futures market has 50 basis points of cuts priced in by
June FEDWATCH .
Central banks in Japan and Canada also meet this week, with
talk the former might ease further if only to prevent an
export-sapping bounce in its currency.
The shift from safe harbours was working to weaken the yen.
The U.S. dollar was firm at 108.98 yen JPY= , having reached
its highest in three months, and was eyeing a major top at
109.31.
It fared less well on the euro, which edged up to $1.1095
EUR= , and was little changed on a basket of currencies at
97.782 .DXY .
Sterling firmed after the European Union agreed to a Brexit
delay of up to three months, while Prime Minister Boris Johnson
lost a vote to force an election on Dec. 12. The pound was last at $1.2852 GBP= , well above its low for
the month at $1.2193.
Spot gold slipped back to $1,491.48 per ounce XAU= , and
away from last week's top around $1,517.
Oil prices were pressured by signs of rising U.S. crude
stock piles. O/R
Brent crude LCOc1 futures slipped 24 cents to $61.33 a
barrel, while U.S. crude CLc1 lost 24 cents to $55.57.

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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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