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Trump set to announce trade deal with Britain, media

report says

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News lift Wall Street, European stock futures

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Investors await US-China trade talks on Saturday

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Markets scale back chance of June, July Fed rate cut

(Updates to Asia afternoon)

By Stella Qiu

SYDNEY, May 8 (Reuters) - Shares in Asia rose on

Thursday after U.S. President Donald Trump flagged a first trade

deal in his global tariff war, while the dollar held most of its

overnight gains as markets pushed out the chance of near-term

rate cuts.

Nasdaq futures erased earlier losses to rally 1.1%,

while S&P 500 futures rose 0.8%. European stock markets

are set for a higher open, with the pan-European STOXX 600

index up 0.9%.

Trump said he would announce details about a major trade

deal with an unspecified country at a press conference later in

the day. The New York Times reported that the deal was with

Britain, which sent FTSE futures 0.8% higher.

The president's comments came as investors anxiously await

planned trade talks between Washington and Beijing on Saturday,

which could mark the first step in resolving a damaging trade

war between the world's top two economies.

Markets are also keeping their eyes on the Bank of England's

policy meeting later in the day where expectations are for a

quarter-point rate cut. Additionally, central banks in Sweden

and Norway are due to deliver their policy decisions, although

no changes are expected.

Overnight, in a widely expected decision, the Federal

Reserve left policy rate in the 4.25%-4.5% range, but said the

risks of higher inflation and unemployment had risen. Chair

Jerome Powell said it isn't clear if the economy will continue

its steady pace of growth, or wilt under mounting uncertainty

and a possible spike in inflation.

Markets scaled back the chance of a June rate cut to just

20%, from 30% a day earlier, while a move in July is now priced

at 70%, compared with a near-certainty just a week ago.

"This suggests little inclination to move until they are

confident of the direction the data is heading, meaning rate

cuts could be delayed, but risk being sharper when they come,"

said James Knightley, chief international economist at ING.

Such a scenario likely supported the longer-dated Treasury

bonds, although they did retrace some of the gains overnight on

Thursday. Benchmark 10-year Treasury yields rose 2

basis points to 4.298%, after falling 7 bps overnight.

The hawkish Fed also gave the dollar a much needed bounce,

although some selling pressure was again evident in Asia. The

dollar index slipped 0.1% to 99.80, having rebounded 0.3%

overnight against its major peers.

On Thursday, MSCI's broadest index of Asia-Pacific shares

outside Japan edged up 0.3% while Japan's Nikkei

gained 0.5%.

Chinese blue chips rose 0.7% and Hong Kong's Hang

Seng increased 0.8%, recovering ground lost since Trump's

"Liberation Day" tariffs last month as Beijing's rate cuts and

stimulus measures helped calm trade concerns.

Overnight on Wall Street, stocks rose on reports that the

Trump administration was planning to rescind and modify a

Biden-era rule that curbed the export of sophisticated

artificial-intelligence chips. Nvidia ( NVDA ) shares jumped 3%.

TRADE TALKS

On Wednesday, Trump suggested that Beijing initiated

upcoming senior-level trade talks and said he was not willing to

cut U.S. tariffs on Chinese goods to get Beijing to the

negotiating table.

China has said earlier that it was the U.S. side that had

signalled a desire to hold talks.

While Trump's comments underlined the recent mixed signals

from Washington on de-escalating the Sino-U.S. trade war,

analysts say the Geneva meeting could help ease tensions.

"The rest of the week will likely see investors cautiously,

if not slightly auspiciously, awaiting trade talks between the

U.S. and China," said Kyle Rodda, a senior analyst at

Capital.com.

In commodities markets, oil prices bounced after falling

more than $1 on Wednesday. U.S. crude futures rose 0.7%

to $58.50 a barrel while Brent was at $61.50 per barrel,

up 0.6% on the day.

In precious metals, gold prices rose 0.3% to $3,374.5

an ounce amid the uncertainties about Fed policy outlook, but

still short of its record high of $3,500.