GLOBAL MARKETS-Asia stocks retreat after Fed tempers aggressive rate cut expectations

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Fed's Powell, Bullard temper July rate cut expectations
* Dollar crawls up from 3-month lows on Fed officials'
comments
* Gold dips from 6-year high, but still up 8.5% for the
month

By Shinichi Saoshiro
TOKYO, June 26 (Reuters) - Asian stocks retreated on
Wednesday and the dollar inched up from three-month lows after
Federal Reserve officials tempered expectations in the markets
for aggressive monetary easing.
Fed Chair Jerome Powell on Tuesday said the central bank is
"insulated from short-term political pressures," pushing back
against U.S. President Donald Trump's demand for a significant
rate cut. Powell, however, said Fed policymakers are wrestling
with questions on whether uncertainties around U.S. tariffs,
Washington's conflict with trading partners and tame inflation
require a rate cut. Separately, St. Louis Fed President James Bullard told
Bloomberg Television he does not think the U.S. economy is dire
enough to warrant a 50-basis-point cut in July, even though he
pushed to lower rates last week. Equity markets have rallied this month, with Wall Street
shares advancing to record highs, after the Fed was seen to have
opened the door to possible rate cuts as early as next month at
is policy-setting meeting last week.
According to latest data from CME Group's FedWatch program,
federal funds futures implied that traders saw a 27% chance of
the Fed lowering rates by half a percentage point in July,
compared to 42% on Monday.
Trump said on Twitter on Monday that the Fed "doesn't know
what it is doing," adding that it "raised rates far too fast"
and "blew it" given low inflation and slowing global growth.

Tracking overnight losses on Wall Street, Australian stocks
.AXJO dipped 0.15%, South Korea's KOSPI .KS11 shed 0.1% and
Japan's Nikkei .N225 retreated 0.6%.
The Shanghai Composite Index .SSEC edged down 0.15% and
Hong Kong's Hang Seng .HSI lost 0.1%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS declined 0.2%.
"While Powell's comments do not alter expectations that the
Fed will ease sooner or later, they do leave a slightly negative
impact on equities," said Masahiro Ichikawa, senior strategist
at Sumitomo Mitsui DS Asset Management.
"The focus is now on the G20 summit. Market expectations for
a meaningful breakthrough being achieved in U.S.-China trade
talks are quite low, so any signs of an improvement could bode
well for risk sentiment."
The United States hopes to re-launch trade talks with
Beijing after Trump and his Chinese counterpart Xi Jinping meet
in Japan during the G20 summit on Saturday but Washington will
not accept any conditions on tariffs, a senior administration
official said on Tuesday. The two sides could agree not to impose new tariffs as a
goodwill gesture to get negotiations going, the official said,
but it was unclear if that would happen.
The dollar index .DXY against a basket of six major
currencies was up 0.15% at 96.289, extending modest overnight
gains.
The index had bounced back from 95.843 on Tuesday, its
lowest level since March 21, following comments from the top Fed
officials.
The dollar added 0.2% to 107.385 yen JPY= after a rebound
from a near six-month low of 106.780.
The greenback had sunk to the six-month trough as the yen, a
perceived safe haven, had drawn bids in the face of brewing
U.S.-Iran tensions.
The euro EUR= slipped 0.05% to $1.1357 after being nudged
off a three-month peak of $1.1412.
U.S. crude oil futures CLc1 advanced nearly 2% to touch a
four-week high of $59.03 per barrel after data showed a decline
in U.S. crude stocks. O/R
The U.S. data helped underpin a crude market already buoyed
by worries over potential U.S.-Iran conflict.
Spot gold XAU= slipped from a six-year high of $1,438.63
an ounce after the comments from Fed officials trimmed
expectations for a rate hike in July.
Gold was last down 0.65% at $1,413.69 an ounce, headed to
snap a six-day winning streak. The precious metal was still up
8.5% so far this month. GOL/

(Editing by Shri Navaratnam and Sam Holmes)