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Asian stock markets: https://tmsnrt.rs/2zpUAr4

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Nikkei flat after big rally, Wall St futures up

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Eyes on Fed minutes, Powell speech to support rate cuts

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Gold holds $2,500 on softer dollar, lower yields

(Adds China, European stocks)

By Wayne Cole

SYDNEY, Aug 19 (Reuters) - Asian stocks were taking a

breather on Monday after global equities enjoyed their best week

in nine months on expectations the U.S. economy would dodge a

recession and cooling inflation would kick off a cycle of

interest rate cuts.

The prospect of lower borrowing costs saw gold clear $2,500

an ounce for the first time and the dollar dip against the euro,

though both the safe haven yen and Swiss franc receded as risk

appetites recovered.

Federal Reserve members Mary Daly and Austan Goolsbee were

out over the weekend to flag the possibility of easing in

September, while minutes of the last policy meeting due this

week should underline the dovish outlook.

Fed chair Jerome Powell speaks in Jackson Hole on Friday and

investors assume he will acknowledge the case for a cut.

"Although it may be too early to declare victory - and

central bankers will certainly be prudent to avoid this in their

official rhetoric - the inflation scare that had dominated the

policy debate since prices started to soar during the pandemic

has now largely vanished," said Barclays economist Christian

Keller.

"Inflation may not be quite at the 2% target yet, but it is

close and going in the right direction."

Futures are fully priced for a quarter-point move,

and imply a 25% chance of 50 basis points with much depending on

what the next payrolls report shows.

Analysts at Goldman Sachs cautioned that annual benchmark

revisions to the jobs series are due on Wednesday which could

see a large downward revision of between 600,000 and one million

positions, though this would likely overstate the weakness of

the labour market.

For now, the expectation of a softer than soft landing for

the U.S. economy has S&P 500 futures up 0.2% and Nasdaq

futures ahead by 0.3%, on top of last week's gains.

EUROSTOXX 50 futures added 0.2% and FTSE futures

eased 0.1%.

MSCI's broadest index of Asia-Pacific shares outside Japan

edged up 0.7%, having rallied 2.8% last week.

Japan's Nikkei turned flat, following a near 9%

bounce last week. Chinese blue chips firmed 0.6%.

The Fed is hardly alone in contemplating looser policy, with

Sweden's central bank expected to cut rates this week, and

possibly by an outsized 50 basis points.

In currency markets, the euro was steady at $1.1025

, just below last week's top of $1.1047. The dollar

stood at 147.79, having been as high as 149.40 last

week.

"The overall Fed message this week is likely to reassure

market participants looking for confirmation that policy rate

cuts are now imminent," said Jonas Goltermann, deputy chief

markets economist at Capital Economics.

"As such, the greenback may well remain under pressure in

the near term, although given the extent to which Fed easing is

already discounted, we doubt there is that much further dollar

weakness in store."

A softer dollar combined with lower bond yields to help gold

hold at $2,500 an ounce, and near an all-time peak of

$2,509.69.

Oil prices dipped again as concerns about Chinese demand

continued to weigh on sentiment.

Brent fell 6 cents to $79.62 a barrel, while U.S.

crude lost 11 cents to $76.54 per barrel.