GLOBAL MARKETS-Asian stocks swoon on signs of prolonged U.S.-China standoff

* 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 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 0.44%. Chinese shares .CSI300 fell
0.47% after briefly touching a five-week low. Australian shares
.AXJO were down 0.76%.
The U.S. Treasury yield 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 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 0.22% 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.
Japan's Nikkei .N225 slid 0.7%, its biggest decline in a
week. Hong Kong shares .HSI fell 0.52%, nearing a four-week
low 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 criticized 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, 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 99.091. The
euro EUR=EBS traded at $1.0965, and the yen JPY=EBS fell
slightly to 107.18 per dollar.
The spread between two-year and 10-year Treasuries, the most
common definition of the yield curve, widened to 11.6 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 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 0.42% to $52.41 per barrel. Brent
crude LCOc1 fell 0.39% to $58.01 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.