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Chinese stocks lead gains in Asia, dollar appreciates

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Powell to speak at 1400 GMT, markets eye policy clues

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Japan core inflation slightly ahead of estimates

(Updates markets, adds quote, China tech rally)

By Gregor Stuart Hunter

SINGAPORE, Aug 22 (Reuters) - Stocks in Asia mostly

clung to safe ranges on Friday as traders awaited a key speech

from Federal Reserve Chair Jerome Powell at the annual Jackson

Hole symposium this weekend that could shed light on the

direction of monetary policy.

Financial markets are looking for Powell to provide clues on

the likelihood of a September rate cut in the wake of recent

signs of job market weakness.

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

gave up early gains and was last down 0.1%,

paring its advance to 1.3% so far this month.

"Top of mind among investors is what central bankers will

say about U.S. tariffs and their impact on economic growth and

inflation, and which of these two factors will have a bigger

influence on interest rate policy, as central banks grapple with

the risk of stagflation," said Vasu Menon, managing director for

investment strategy at OCBC in Singapore.

Defying the sleepy mood, China's blue-chip CSI 300 Index

jumped 1.8%, on track for a third consecutive day of

gains. Tech shares led the advance, after DeepSeek released an

upgrade to its flagship V3 AI model and Reuters reported Nvidia ( NVDA )

had asked Foxconn to suspend work on the H20

AI chip, lending support to shares of Chinese rivals.

China's tech-focused STAR 50 index rose almost 8%.

The Nikkei 225 veered between gains and losses, and

was last down 0.1%.

Japanese data showed core consumer prices slowed for a

second straight month in July but stayed above the central

bank's 2% target, keeping alive expectations for a rate hike in

the coming months. That did little to help the yen, though,

which was poised for a 1% decline for the week. BOJ Governor

Kazuo Ueda will also speak at Jackson Hole this weekend.

The dollar index, which tracks the greenback against

a basket of currencies of major trading partners, advanced 0.2%

to 98.796, as traders parsed speeches from Fed officials who

appeared lukewarm to the idea of an interest rate cut next

month.

S&P 500 futures bobbed between gains and losses and

were last trading down 0.1%. The cash gauge on Wall Street is on

a five-day losing streak, which has left it on track for its

biggest one-week decline this month.

Traders had ramped up bets for a September cut following a

surprisingly weak payrolls report at the start of this month,

and after consumer price data showed limited upward pressure

from tariffs.

However, market pricing pulled back slightly following the

release of minutes from the Fed's July meeting. Traders are now

pricing in a 73.3% probability of a cut in September, down from

82.4% on Thursday, according to the CME Group's FedWatch tool.

The most likely scenario is that Powell won't provide "any

definitive clues" on what the Fed will do next ahead of critical

non-farm payrolls and CPI data, Kong said.

"Given where the current market is, the risk is a stronger

U.S. dollar, especially if he challenges the current market

pricing of a 25-basis-point cut."

Traders are assessing signs that U.S. economic activity

picked up pace in August, with PMI data from S&P Global showing

the strongest growth in manufacturing orders in 18 months.

But the labour market also highlighted pockets of weakness,

as the number of Americans filing new applications for jobless

benefits rose by the most in about three months last week and

the number of people collecting unemployment relief in the prior

week climbed to the highest level in nearly four years.

The euro slipped, weakening 0.2% to a two-week low

of $1.1585 as the EU and the U.S. set out details of a framework

trade deal struck in July.

Oil prices stabilised, with Brent crude last trading

up 0.1% at $67.73 per barrel, following strong gains on Thursday

as Russia and Ukraine blamed each other for a stalled peace

process, and U.S. data showed signs of strong demand in the top

oil consuming nation.

Gold was slightly lower, with spot bullion off 0.3%

at $3,329.40 per ounce.