GLOBAL MARKETS-Asian shares advance on U.S.-China trade hopes, ECB stimulus

* Ex-Japan Asia MSCI up 0.16%, Nikkei gains 0.42%
* S&P 500 near record peak hit in late July
* Euro, bonds lose steam on profit-taking after ECB
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano
TOKYO, Sept 13 (Reuters) - Asian stocks advanced on Friday
as hints of progress in the U.S.-China trade dispute and
aggressive stimulus from the European Central Bank helped to
counter worries about a global economic slowdown.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS ticked up 0.2%, while Japan's Nikkei .N225
rose 0.4%.
Sentiment was also supported by U.S. President Donald
Trump's announcement that his administration would unveil a tax
overhaul plan aimed at middle-income households next
year.
"Risk assets should find further support from accommodative
policies, which are set to remain in vogue for some time, and
not just in Europe as seen in the global easing trend," said
Esty Dwek, head of global market strategy at Natixis.
"Nonetheless, we believe that trade uncertainty and growth
concerns will not vanish, so any reprieve on either subject will
be welcome. We also believe that some earnings growth will be
needed for equities to grind higher," she said.
Although conflicting reports on Thursday about whether Trump
administration officials had considered offering a limited trade
deal to China made U.S. markets choppy, investors overall were
sticking to hopes of more progress in upcoming talks.
The United States on Thursday welcomed China's renewed
purchases of U.S. farm goods while maintaining the threat of
U.S. tariff hikes as the world's two largest economies prepared
the ground for talks aimed at breaking the logjam in their trade
war. Trump said he preferred a comprehensive trade deal with
China but did not rule out the possibility of an interim pact,
even as he said an "easy" agreement would not be
possible. Most economists in a new Reuters poll believed the trade
dispute will worsen or at best stay the same over the coming
year. The U.S. S&P 500 closed within striking distance of its
all-time closing high, rising 0.29% to 3,009.57, near record
closing high of 3,024.50 marked in late July. .N
Philadelphia semiconductor shares index .SOX hit an
all-time high while MSCI ACWI .MIWD00000PUS also came near
this year's high after seven straight days of gains by Thursday.
The European Central Bank delivered bigger-than-expected
stimulus, cutting interest rates by 0.10 percentage point to
minus 0.50 percent, promising that rates would stay low for
longer and restarting bond purchases of 20 billion euros a month
from November. The resumption of quantitative easing had been seen as a
close call and helped to boost risk assets.
But the euro quickly lost steam and European bond yields
also rose as profit-taking set in.
ECB President Mario Draghi stepped up his rhetoric in
calling for governments to spend their way out of a slowdown,
highlighting the limitations of monetary policy and also fanning
expectations of fiscal spending down the road.
The euro stood at $1.10615 EUR= , having risen 0.5 percent
on Thursday and staying near two-week high of $1.10875 hit in
U.S. trade.
Rising risk appetite pushed the yen down to 108.15 yen per
dollar JPY= . It hit a six-week low of 108.19 on Thursday.
The 10-year German Bund yields also rose back to minus
0.521% DE10YT=RR .
That also helped to lift the yield on 10-year U.S.
Treasuries to as high as 1.081 percent US10YT=RR , its highest
level since early August.
Fed funds rate futures 0#FF: price in an interest rate cut
of 0.25 percentage point by the Fed next week but have
effectively priced out any chance of a larger cut.
The Fed will announce its policy on Wednesday, followed by
the Bank of Japan (BOJ) on Thursday.
Sources told Reuters the BOJ is leaning towards standing pat
next week if markets are calm, but is brainstorming ways to
deepen negative interest rates at minimal cost. "I think a rally in stock prices will run out of steam soon.
It's typical buy-on-rumour-sell-on-fact trade on central bank
stimulus and will be over by the Fed and the BOJ's meetings,"
said Tatsushi Maeno, senior strategist at Okasan Asset
Management.
"People also seem to think there will be a deal between
China and the States soon but you never know when suddenly Trump
do about-face. We just saw that in May and August," he added.
Oil prices were softer as a meeting of the OPEC+ alliance
yielded no decision on deepening crude supply cuts.
Brent crude LCOc1 futures fell 0.2% to $60.29 a barrel
while U.S. West Texas Intermediate (WTI) crude CLc1 lost 0.2%
to $54.96.

(Editing by Kim Coghill)