GLOBAL MARKETS-Asian stocks rally after Fed rate cut, BOJ keeps policy steady

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Fed cuts rates as expected but signals pause
* BOJ keeps policy on hold, changes forward guidance
* Policymakers struggle to deal with risks to growth

By Stanley White
TOKYO, Oct 31 (Reuters) - Asian shares jumped on Thursday to
a three-month high and the dollar fell broadly after the Federal
Reserve cut interest rates as expected and U.S. Treasury yields
declined.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.68% to the highest since July 30. Hong
Kong shares .HSI rose 1.16%, while Japan's Nikkei stock index
.N225 rose 0.2%.
U.S. Treasury yields slipped in Asia after the rate cut, but
Fed Chairman Jerome Powell signalled additional trims are
unlikely because there are several areas of strength in the U.S.
economy.
The yen JPY= held onto gains versus the dollar after the
Bank of Japan keep its ultra-easy monetary policy in place as
expected and changed its forward guidance to more clearly signal
the future chance of a rate cut. Debate at the Fed and the BOJ highlights the struggle that
many central banks are facing.
The U.S.-China trade war and Britain's divorce from the
European Union have increased uncertainty, but central banks are
somewhat reluctant to ease policy aggressively because interest
rates are already very low in many major economies.
"The biggest thing that stands out is stocks look stronger
after the Fed," said Tsutomu Soma, general manager of fixed
income business solutions at SBI Securities in Tokyo.
"Risks like U.S.-China or Brexit haven't been resolved
completely, but the markets are starting to look beyond these
risks."
U.S. stock futures ESc1 edged 0.01% higher on Thursday in
Asia after the S&P 500 rose 0.33% to close at a record high on
Wednesday for the second time in three trading sessions.
A positive mood on Wall Street carried over to Asian
equities, except for Australian shares .AXJO , which fell 0.51%
after weak earnings from Australia and New Zealand Banking Group
ANZ.AX .
The Fed lowered its policy rate to 1.50%-1.75%, but dropped
a previous reference in its statement to "act as appropriate" to
sustain the economic expansion. In his news conference, Powell listed several reasons why he
feels the economy is doing well, such as robust consumer
spending, strengthening home sales, and healthy asset prices.
The yield on benchmark 10-year Treasury notes US10YT=RR
fell to 1.7785% in Asia on Thursday, while the two-year yield
US2YT=RR eased slightly to 1.6216%.
The dollar index .DXY against a basket of six major
currencies fell 0.34% to 97.318, extending declines from
Wednesday.
News that Chile will not host the Asia-Pacific Economic
Cooperation (APEC) summit in mid-November was one reason the
dollar was dented - as the market has been expecting the United
States and China to sign a partial trade deal there.
But despite the setback in Chile, Chinese officials voiced
optimism that Beijing and Washington can find a way to clinch
the so-called Phase One trade deal next month. The greenback fell to 7.0420 yuan CNY=CFXS in onshore
trade, the lowest since Aug. 19.
The yen rose 0.2% to 108.67 per dollar JPY=EBS , holding
onto gains after the BOJ left policy unchanged as expected.
Traders will focus on BOJ Governor Haruhiko Kuroda's press
conference later on Thursday to gauge how he assesses the risks
posed by the U.S.-China trade war and Brexit. Optimism that Washington and Beijing will sign a preliminary
agreement to call a truce to their trade war was a factor behind
the Fed's decision to signal that further rate cuts are on hold,
highlighting the importance of trade talks to global monetary
policy. In the energy market, oil futures erased loses and rose in
Asia on Thursday after as a massive buildup in U.S. crude stock
piles triggered a decline in futures on Wednesday.
U.S. crude CLc1 erased loses and rose 0.22% to $55.18 a
barrel. Brent crude LCOc1 rose 0.45% to $60.88 per barrel.