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Investors shrug off Moody's US credit downgrade

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Dollar drifts as selloff in Treasuries ease

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RBA cuts rates as expected, Aussie down 0.5%

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CATL debuts in Hong Kong in world's biggest listing this

year

(Updates to Asia afternoon)

By Ankur Banerjee and Johann M Cherian

SINGAPORE, May 20 (Reuters) - Asian stocks rose on

Tuesday while U.S. Treasury yields steadied, allowing a bit of a

breathing room for the U.S. dollar as investors took stock of

the debt load of the world's biggest economy and awaited trade

deals.

The Australian dollar slipped 0.5% to $0.64255

after the Reserve Bank of Australia lowered interest rates as

expected, citing a darker global outlook, though it also

remained cautious on further easing.

"With the RBA sounding increasingly uneasy, the path of

least resistance for the currency may remain lower," said Charu

Chanana, chief investment strategist at Saxo in Singapore.

"Especially if domestic data softens further or global risks

flare up again."

In the broader market, investors have taken in stride

Moody's downgrade of its rating for U.S. sovereign credit last

week due to concerns about that nation's growing $36 trillion

debt pile. After a brief selloff in Treasuries on Monday, they

stabilised by Asian trading hours on Tuesday.

The 30-year bond yield was 2.8 basis points

lower at 4.912% after hitting an 18-month high of 5.037% in the

previous trading session.

European futures pointed to a higher open ahead of

a first estimate of consumer confidence for euro zone in May.

"The Moody's downgrade was a temporary shock and rather

meaningless in the bigger picture," said Kyle Rodda, senior

financial market analyst at Capital.com.

"But then we're not really being fed any kind of fresh new

news for investors to buy into... We haven't gotten any new

deals coming through."

With little indication of trade deals on the way, markets

are struggling for direction, analysts said.

That left the MSCI's broadest index of Asia-Pacific shares

outside Japan 0.33% higher, hovering near the

seven-month high touched last week.

China's blue-chip index climbed 0.6% after the

local central bank cut benchmark lending rates for the first

time since October.

Hong Kong's Hang Seng Index rose 1.33%, boosted by

healthcare stocks after U.S. drugmaker Pfizer ( PFE ) said it

would license an experimental cancer treatment from Chinese

biotech 3SBio Inc. ( TRSBF )

Also in the spotlight was a strong market debut from Tesla

battery supplier CATL, which rose 12.5% at

the open. The firm raised $4.6 billion in its Hong Kong listing,

the largest in the world this year.

MOODY'S IMPACT

U.S. Federal Reserve officials took on cautiously the

ramifications of the Moody's downgrade as they continued to

navigate an uncertain economic environment in the wake of

erratic U.S. trade action.

While not an imminent issue for the Fed, higher borrowing

costs tied to a deteriorating U.S. financial position could make

credit generally more expensive and create restraint on economic

activity.

"For now, U.S. exceptionalism and corporate resilience are

offsetting the risks," said Saxo's Chanana.

"But how long before investors start demanding a higher risk

premium, especially with the Fed in wait-and-see mode and trade

talks seemingly stalling?"

Markets will be monitoring a U.S. congressional debate over

a tax bill later in the day at which Trump is widely expected to

be present ahead of a vote on the legislation later this week.

The measure would extend Trump's 2017 tax cuts and

potentially add $3 trillion to $5 trillion to national debt over

the next decade.

In commodities, oil prices were mixed as investors contended

with a potential breakdown in talks between the U.S. and Iran

over the latter's nuclear activity and weakened prospects of

more Iranian supply entering the market.

Gold prices slipped 0.3% to $3,218 per ounce as safe

haven demand dipped.

(Reporting by Ankur Banerjee and Johann M. Cherian in

Singapore; Editing by Christopher Cushing and Lincoln Feast.)