* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Stocks rattled by growing U.S.-China tensions
* Fed's Powell signals more debt purchases
* Hopes fade for end to U.S.-Sino trade war
* Oil prices fall due to weakening demand outlook
By Stanley White
TOKYO, Oct 9 (Reuters) - Asian stocks fell the most in a
week on Wednesday as the United States and China's broadening
dispute over trade and foreign policy showed little sign of
coming to an end, weighing on global economic growth.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was down 0.61%. Chinese shares .CSI300 fell
0.32% after briefly touching a five-week low. Australian shares
.AXJO were down 0.76%.
Pan-region Euro Stoxx 50 futures STXEc1 edged up 0.03%,
German DAX futures FDXc1 rose 0.03%, while FTSE futures
FFIc1 eased 0.08%.
The U.S. Treasury yield curve steepened after U.S. Federal
Reserve Chair Jerome Powell signalled further interest rate cuts
and the resumption of bond purchases to address a recent spike
in money markets rates.
Oil prices extended declines as U.S. visa restrictions on
Chinese officials and the addition of more Chinese companies to
a U.S. trade blacklist weighed on already slim hopes that
Washington and Beijing could reach a truce at trade negotiations
this week.
The United States and China are engaged in a year-long row
that has slowly expanded beyond trade policy, suggesting even
more damage to an already fragile global economy.
"Stock markets are still trying to price in the slowdown in
global growth," said Kiyoshi Ishigane, chief fund manager at
Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.
"The dispute between the United States and China shows no
sign of ending. We're losing confidence in the U.S. economy.
There's more uncertainty about where the Fed is really headed."
U.S. stock futures ESc1 rose 0.16%, but sentiment was weak
after the S&P 500 ended 1.56% lower on Tuesday in response to
the U.S. visa restrictions.
Japan's Nikkei .N225 slid 0.73%, its biggest decline in a
week. Hong Kong shares .HSI fell 0.68% due to persistent
worries about often violent protest against China's rule of the
former British colony.
Shares fell in Apple Inc's AAPL.O suppliers in Greater
China, such as Luxshare Precision 002475.SZ and O-Film Tech
002456.SZ , after China's state media criticised the iPhone
maker for an app use by Hong Kong protesters.
The U.S. State Department announced the visa restrictions
just a day after the U.S. Commerce Department cited the
mistreatment of Uighur Muslims in China in its decision to add
20 Chinese public security bureaus and eight companies to a
trade blacklist. The U.S. moves cast a pall over U.S.-China trade talks in
Washington, where deputy negotiators met for a second day to
prepare for the first minister-level meetings in more than two
months on Thursday and Friday.
Washington is also moving ahead with discussions about
restrictions on capital flows into China, Bloomberg reported.
Tit-for-tat tariffs imposed by the United States and China
have roiled financial markets and slowed capital investment and
trade flows.
U.S. President Donald Trump has said tariffs on Chinese
imports will rise on Oct. 15 if no progress is made in the
negotiations.
In currencies, the onshore yuan CNY=CFXS opened at its
weakest since Sept. 6 but then traded relatively flat at 7.1434
per dollar.
Sterling GBP=D3 traded near a one-month low of $1.2196 due
to reports that Brexit talks between Britain and the European
Union were close to breaking down.
The dollar index .DXY was little changed at 99.095. The
euro EUR=EBS traded at $1.0962, and the yen JPY=EBS fell
slightly to 107.15 per dollar.
The spread between two-year and 10-year Treasuries, the most
common definition of the yield curve, widened to 11.3 basis
points. US2US10=TWEB
The Fed's Powell, in a speech on Tuesday, flagged openness
to further rate cuts and said the time to allow the Fed's asset
holdings to begin to expand again "is now upon us." The U.S. central bank had been shrinking its balance sheet
as it unwound crisis-era bond buying programmes. Recent
volatility in U.S. money markets raised concern the Fed's
balance sheet had become too small, leaving banks with
inadequate reserves.
Powell said balance sheet expansion should not be read as an
effort to stimulate the economy, but weak data on the U.S.
manufacturing and services sector last week rattled investors'
confidence that the U.S. economy remained robust.
U.S. crude CLc1 fell 0.48% to $52.38 per barrel. Brent
crude LCOc1 fell 0.41% to $58.00 a barrel.
A larger-than-expected increase in U.S. crude inventories
added to fears that the global oil market will continue to
struggle with excess supply. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Bank reserves held at the Fed https://tmsnrt.rs/2ncykxy
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(Editing by Richard Pullin and Jacqueline Wong)