SINGAPORE, Sept 26 (Reuters) - Asian stocks bucked the

global trend to extend a rally on Thursday, fuelled by

persistent optimism over China's aggressive stimulus package,

although there were signs some of that enthusiasm was starting

to ebb.

The sea of green across equities in Asia came even as Wall

Street closed lower overnight with global stock indexes giving

up their gains from earlier in the week.

"After such a strong run in the past few days, one could

argue the selling was largely driven by profit-taking, while

others will suggest that it symbolises a belief that the PBOC's

policy stimulus is in no way a game changer and will fail to

lift consumption in any capacity," said Chris Weston, head of

research at Pepperstone.

Still, MSCI's broadest index of Asia-Pacific shares outside

Japan rose more than 1% to an over two-year high

on Thursday. Japan's Nikkei surged 2.4%.

Hong Kong's Hang Seng Index similarly advanced 1.5%,

while the mainland CSI300 blue-chip index reversed

early losses to last trade 0.3% higher.

Also aiding sentiment, Bloomberg News reported on Thursday

that China is considering injecting up to 1 trillion yuan

($142.39 billion) of capital into its biggest state banks to

increase their capacity to support the struggling economy.

In the broader market, investors turned their attention to a

raft of speeches from Federal Reserve policymakers later in the

day, including remarks from Chair Jerome Powell, which could

provide further clues on the U.S. rate outlook.

The release of the core personal consumption expenditures

(PCE) price index - the Fed's preferred measure of inflation -

is also due on Friday.

"I don't think the reaction will be excessive, but the

direction will be there," said Jeff Ng, head of Asia macro

strategy at SMBC, referring to Friday's data release. "If let's

say prices are sticky, then maybe that will slightly dampen

expectations for a 50-basis-point (rate cut)."

Markets are now pricing in a roughly 62% chance of a 50bp

cut at the Fed's November policy meeting and see a total of

77bps worth of cuts by the year end.

Shifting expectations of how aggressive the Fed would ease

rates this year and next have in turn kept the dollar largely

rangebound over the past month.

It was back on the front foot on Thursday, having fallen

earlier in the week as China's slew of support measures boosted

risk appetite and sent traders scooping up China-linked assets

such as the Australian and New Zealand dollars.

Analysts said the greenback also drew additional support

from month-end flows.

The Aussie was last 0.18% higher at $0.6835, while

the kiwi eased 0.06% to $0.6257.

Against the dollar, the euro and sterling

retreated from their recent peaks to last trade at $1.1137 and

$1.3324, respectively.

The offshore yuan ticked up 0.06% to 7.0277 per

dollar, having briefly strengthened past the key psychological

level of 7 per dollar in the previous session.

"While rate cuts should weigh on the RMB, this may be offset

by equity inflows," said DBS analysts in a note.

"Still, China's economic outlook remains fragile, and

sustained RMB gains are acceptable only if regional currencies

continue their appreciation against the USD."

In commodities, oil prices edged up with Brent crude futures

last 0.27% higher at $73.66 a barrel. U.S. crude

rose 0.2% to $69.82 per barrel.

Spot gold was steady at $2,659.56 an ounce, having

scaled a record high on Wednesday.

(Editing by Sam Holmes)