GLOBAL MARKETS-Asian stocks fall by the most in a week as U.S.-China standoff escalates

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Stocks rattled by growing U.S.-China tension
* 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
ever-expanding 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 0.3%. Japan's Nikkei .N225 slid
0.81%. Australian shares .AXJO were down 0.92%.
U.S. two-year Treasury yields fell and the curve steepened
in Asia 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 fell in Asia 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 now
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 edged 0.06% higher in Asia, but
sentiment was weak after the S&P 500 ended 1.56% lower on
Tuesday in response to the U.S. visa restrictions.
The U.S. State Department announced the move 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.
Worries about U.S.-Sino relations lifted safe-haven assets
in Asia. The yen JPY=EBS edged around 0.1% higher to 106.95
per dollar. Spot gold also rose 0.21% to $1,508.90 per ounce.
GOL/
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 two-year U.S. Treasury yield US2YT=RR fell to 1.4174%.
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 Fed 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 became 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 0.42% to $52.41. Slower growth in the
United States and China, the world's two-largest economies,
suggests less demand for energy in the future.
A larger-than-expected increase in U.S. crude inventories
also fanned fears that the global oil market will continue to
struggle with excess supply. (Editing by Lincoln Feast)