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* The MSCI Asia-Pacific index up 0.75%, the Nikkei gains 0.9%
* Dollar sinks largely after Powell's comments
* Short-term US Treasury yield prolongs decline after Powell
* Chart: Global exchange rates in 2018 http://tmsnrt.rs/2egbfVh
By Shinichi Saoshiro
TOKYO, November 29 (Reuters) – Asian stocks advanced on Thursday, reflecting a Wall Street rally after the US Federal Reserve chairman suggested his three-year rate tightening cycle could soon end, reinforcing thus the interest in risky badets.
The dollar struggled and US Treasury yields plummeted after Jerome Powell said on Wednesday that US key interest rates were "just below" neutral, less than two months after stating that rates were likely "very far "from this point.
The largest MSCI index of Asia Pacific shares out of Japan rose 0.8%.
The Shanghai Composite Index rose 0.2%, Australian stocks 0.5% and Japan's Nikkei 0.9%.
Earnings in Asia, however, were tempered by investors' fears ahead of the high-stakes trade talks between US President Donald Trump and his Chinese counterpart Xi Jinping on Saturday in the wake of the G20 summit in Argentina.
ANZ economists have pointed out that the political hawks of the Trump administration who want Washington to take a firm stance against Beijing seem to be gaining the upper hand.
"They will want concessions from China, especially on what they perceive as an intellectual property theft and a forced technology transfer," ANZ economists wrote.
"Thus, it would seem that the prospect of the Trump-Xi meeting ends without lasting resolution of their differences is relatively high."
Analysts believe that any signs of thaw in US-China tensions could trigger a reflex rebound, but believe that the decision would be short-lived, unless a substantial compromise on the part of both parties, especially if Xi can persuade Trump to defer a strong customs tariff. hike on Chinese products to take effect on January 1st.
The Dow rose by 2.5% and Nasdaq by nearly 3% on Wednesday, while Powell's comments eased fears of an accelerating rate hike in 2019.
"The shares have won because Powell suggested cutting rate hikes while the economy was still doing well," said Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities in Tokyo.
"The likelihood of a slower US monetary tightening has caused the dollar to fall against currencies, particularly the euro, which could soon benefit from a higher ECB rate."
The euro was a little higher at 1.1374 dollar after rising 0.7% the day before.
The dollar plunged 0.2% to 113.46 yen after being reversed after a two-week high above 114.00 overnight.
The Australian dollar, which is sensitive to the general sentiment towards risk, jumped more than 1% on Wednesday and barely moved at 0.7302.
The dollar index versus a basket of six major currencies was actually at 96,805, after a loss of 0.6% day-to-day.
The two-year US Treasury yield has continued a slight decline from the previous day as a result of Powell's comments. Yield was down about 1 basis point to 2.796%.
Oil prices offset some of the losses from the previous session, but rising US crude inventories and uncertainties surrounding an OPEC meeting next week have kept markets under pressure.
The US crude futures price rose 0.8% to $ 50.66 a barrel after slipping 2.5% the day before.
Brent rose 0.6% to 59.13 USD. It fell 21% this month, during which it hit a low of $ 58.41 in 13 months. (Edited by Sam Holmes and Kim Coghill)
Our standards: The principles of Thomson Reuters Trust.
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