* MSCI AxJ index makes unconvincing 0.3% gain
* Dollar strength points to persistent caution
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook and Suzanne Barlyn
SINGAPORE/NEW YORK, Sept 23 (Reuters) - Asia's stock markets
struggled for gains on Wednesday and the U.S. dollar rose to a
two-month high as persistent worries about the global economic
recovery had investors preferring safety.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.3% for its first gain this week, but the
mood was hardly bullish.
Japan's Nikkei .N225 returned from a two-day holiday to
slip 0.4%. Markets elsewhere offered only a lacklustre follow up
to Wall Street's rebound, with Hong Kong and Shanghai steady.
Australia's ASX 200 .AXJO gained 2.6%, Aussie bonds
rallied and the Aussie dollar slipped on growing expectations
that the central bank eases policy again next month.
The standout mover was the gaining dollar, which briefly
sent spot gold XAU= to a six-week low of $1,881.65 an ounce.
GOL/
"There looks to be a squeeze on dollar shorts," said Westpac
FX analyst Sean Callow, with positions stretched and no new
stimulus from the Federal Reserve to keep it under pressure.
The greenback begun gaining after hawkish remarks from a
senior U.S. Federal Reserve official overnight and extended in
Asia amid a general tone of risk aversion - adding 0.2% against
a basket of currencies USD= to its highest since July. .DXY
FRX/
Chicago Fed President Charles Evans, due to become a voter
on the Federal Open Market Committee in 2021, said on Tuesday
the Fed still needed to discuss its new inflation approach but
it "could start raising rates before we start averaging 2%."
That crimped inflation expectations, lifted U.S. real yields
and set the dollar rising. "Attempts to fade dollar bounces seemed to be weakening,"
said OCBC Bank FX strategist Terence Wu. "We put that down to a
lack of fresh dollar downside drivers."
The euro EUR= was forced below $1.17 in Asia and last
traded at $1.1683 and traders say more downside risk is possible
if rising coronavirus infections in Europe weigh on preliminary
purchasing managers' index figures due at 0800 GMT.
EASY DOWN UNDER
The recovery of U.S. stocks on Tuesday, like the slump
through September, lacked an immediate trigger and comes with
plenty of geopolitical and economic risks to the recovery.
China-U.S. tensions are simmering, Britain has re-imposed
some curbs on restaurants to try and head off a second wave of
coronavirus infections and the U.S. election campaign seems to
be distracting Congress from passing major aid bills.
In Asia, a Tuesday speech from a senior central banker in
Australia, which flagged more monetary support, seems to have
refocused investor attention on the long-term economic malaise
that job losses and consumption cuts could cause.
"In the (central) bank's current figuring, restoration of
the full employment rate ... is in the far distant future,"
Westpac economist Bill Evans said in a note.
"That means that policy needs to be very stimulatory," he
said, forecasting an interest rate cut in Australia next month.
The Australian dollar AUD=D3 fell 0.5% to a six-week low
of $0.7116 on Wednesday and longer-tenor yields sank in
anticipation that central bank bond buying might be extended.
Elsewhere in Asia, the Malaysian ringgit MYR= fell sharply
amid fresh political turmoil as opposition leader Anwar Ibrahim
claimed he now has enough support to oust the government and
command a majority in parliament as leader himself. Oil prices continued to retreat from last week's gains,
slipping in Asia after an industry group reported a surprise
rise in U.S. crude inventories, adding to worries about demand.
Brent crude futures LCOc1 were last down 0.7% at $41.42 a
barrel and U.S. crude futures CLc1 slipped 0.9% to $39.43.
O/R
U.S. bonds were steady, with the yield on benchmark 10-year
U.S. debt US10YT=RR up less than one basis point at 0.6724%.
US
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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