SINGAPORE, July 3 (Reuters) - Asian stocks rose on

Wednesday as comments from Fed Chair Jerome Powell reinforced

expectations that U.S. rate cuts were not far off, while the yen

remained pinned near levels last seen in 1986, keeping traders

wary of Japanese intervention.

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

was 0.26% higher, while Japan's Nikkei

rose 0.49%, stalking the record high touched in March.

The U.S. is back on a "disinflationary path", Powell said on

Tuesday, although he cautioned that policymakers need more data

before they can consider cutting interest rates.

Powell's comments sent U.S Treasury yields 4.3 basis points

lower overnight, with the yield on the 10-year note steady at

4.433% in Asian hours on Wednesday, keeping the dollar subdued.

Investors were also weighing data showing a tight U.S. labour

market.

Michael Brown, senior research strategist at Pepperstone,

said Powell's remarks sounded, at the margin, just a touch more

dovish than those made as of late.

"Commentary of this ilk appears to further open the door to

a September rate cut, especially with Powell also flagging the

risk associated with leaving it too late to deliver the first

rate reduction."

Traders are currently pricing in a 69% chance of the Fed

cutting rates in September and as many as two rate cuts this

year, a far cry from the over 150 basis points of easing

expected at the start of the year.

Chinese stocks fell in early trading, with the blue-chip CSI

300 index down 0.27%. Hong Kong's Hang Seng was

0.3% higher.

Data showed China's services activity expanded at the

slowest pace in eight months and confidence hit a four-year low

in June, dragged by slower growth in new orders, suggesting the

need for more economic stimulus.

RATE CUT HOPES

The prospect of a U.S. rate cut coming soon has kept a lid

on the dollar's ascent, with the dollar index, which measures

the U.S. unit against six rivals, steady at 105.71.

The yen was slightly weaker at 161.63 per dollar,

close to the 38-year low of 161.745 it touched on Tuesday.

The yen has dropped over 12% against the greenback this

year, hurt by the wide gap between the interest rates in the

U.S. and Japan.

Traders have been on the lookout for signs of Japanese

authorities intervening in the currency market to prop up the

frail yen, with some analysts suggesting that the line in the

sand might be further away than current levels.

"We suspect interest on the pair has subsided as

intervention threat looms around the 164-165 level," said Alex

Loo, macro strategist at TD Securities in Singapore.

Meanwhile, the euro last fetched $1.07455, just

below the two-week high it hit on Monday as opponents of

France's National Rally (RN) stepped up their bid to block the

far-right party from power, with more candidates agreeing to

pull out of the run-off election to avoid splitting the anti-RN

vote.

Data on Tuesday also showed euro zone inflation eased last

month but a crucial services component remained stubbornly high,

likely fuelling concern among some policymakers that domestic

price pressures could stay at elevated levels.

Sterling was little changed at $1.2685 ahead of the

UK general election on Thursday where the opposition Labour

party is widely expected to win a landslide victory.

In commodities, oil prices were higher as U.S. industry data

boosted hopes of solid fuel demand during the summer driving

season in the top oil consuming nation.

Brent crude oil futures rising 0.44% to $86.62 a

barrel, while U.S. West Texas Intermediate crude futures

were 0.41% higher at $83.15 per barrel.