GLOBAL MARKETS-Asian stocks struggle ahead of Powell's speech; yuan at fresh 11-1/2 yr low

* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Yuan at new 11-1/2 yr low; offshore yuan weaken past 7.1
per USD
* Sterling jumps as traders cling to Merkel's backstop
comments
* Traders await Fed chair Powell's Jackson Hole speech, G7
summit

By Tomo Uetake
TOKYO, Aug 23 (Reuters) - Asian shares struggled to make
headway on Friday as uncertainty over how much further the U.S.
Federal Reserve would cut interest rates added to investors'
worries over slowing global growth.
With a trade war between the United States and China
dragging on, and political tumult in Hong Kong, Italy and
Britain adding to the tense backdrop, investors were keenly
awaiting Fed Chair Jerome Powell's speech at a gathering of
central bankers in Jackson Hole, Wyoming, later in the day (1400
GMT).
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS edged 0.1% higher and was up 0.8% for the week,
on track to break a four-week losing streak.
Japan's benchmark Nikkei .N225 added 0.3% and Australian
stocks .AXJO rose 0.3%.
The Shanghai Composite .SSEC and the blue-chip CSI300
.CSI300 were up 0.5% and 0.7%, respectively, while Hong Kong's
Hang Seng .HSI gained 0.5%.
Business surveys on Thursday suggested further slowing in
advanced economies in August, but service sector activity
remained resilient, offsetting some of the drag from weak
manufacturing.
"It's going to be another wait-and-see day for traders ahead
of Powell's Jackson Hole speech. Investors are hoping for some
soothing words from him," said Hirokazu Kabeya, chief global
strategist at Daiwa Securities.
Wall Street stocks were mixed on Thursday, with the S&P 500
.SPX closing little changed, while the Dow .DJI was up 0.2%
and the Nasdaq .IXIC falling 0.4%. .N
In the U.S. bond market, the closely watched two-year,
10-year Treasury yield curve briefly moved back into inversion
overnight, a shift that also occurred last week and sent
financial markets into a tailspin amid worries of a sharp global
downturn. An inversion in the U.S. yield curve has presaged several
past U.S. recessions, raising fears the decade-long expansion in
the world's biggest economy might be nearing its end.
While markets overwhelmingly expect the Fed to follow up its
first rate cut in a decade with more stimulus at its meeting
next month, some policymakers disagree.
Kansas City Fed President Esther George, who dissented
against the decision to ease in July, and Philadelphia Fed
President Patrick Harker, who said he "reluctantly" supported
the cut, both said the U.S. economy does not need more stimulus
at this point. Dallas Fed President Robert Kaplan said the businesses had
become much more cautious due to surprises on trade policy and
he was "going to at least be open-minded about making some
adjustment" if he sees continued weakness.
All of that has made Powell's speech in Jackson Hole pivotal
for markets as they look for any clues on future easing, after
the Fed last month cut rates for the first time since the
financial crisis.
Any indications of hawkishness in the Fed chief's comments
might hurt riskier assets, though the dollar stands to benefit.
The greenback slipped on Thursday, but moved within narrow
ranges. In early Asian trading, the dollar was up 0.1% against a
basket of major currencies to 98.293 .DXY .
The euro also was little changed against U.S. currency at
$1.1073. A survey showing a surprise uptick in euro zone
business growth for August was offset somewhat by trade war
fears knocking future expectations to their weakest in over six
years. The pound GBP=D4 jumped to a three-week high of $1.2273
overnight after traders interpreted comments from German
Chancellor Angela Merkel to mean that a solution to the Irish
border problem could be found before Britain leaves the European
Union on Oct. 31. Merkel on Wednesday challenged Britain to come up with
alternatives to the Irish border backstop within 30 days, but
French President Emmanuel Macron cautioned there would be no
renegotiation of the Brexit deal. Sterling last
quoted at $1.2234, 0.1% weaker on the day.
China's yuan extended losses, threatening to stoke trade
tensions between Washington and Beijing.
Spot yuan CNY=CFXS slid to as low as 7.0992 per dollar,
its weakest since March 2008, although the central bank set the
midpoint rate at 7.0572, its weakest level in 11-1/2 years, but
was much stronger than traders had expected. Washington labelled China a currency manipulator early this
month after a sharp slide in the yuan.
Concern about China's economy is growing because U.S.
tariffs on roughly $150 billion of Chinese goods will take
affect from Sept. 1. Oil prices weakened overnight, with both Brent crude and
U.S. West Texas Intermediate down 0.6% each, on worries about
the global economy. O/R
Brent crude LCOc1 was last up 0.3% at $60.11 per barrel
and WTI crude CLc1 added 0.2% to $55.46.
Gold prices dipped on Thursday but held near the pivotal
level of $1,500 per ounce, underpinned by demand for the
precious metal amid uncertainties around monetary policy, trade
and geopolitical tensions. GOL Spot gold XAU= was last down
0.2% at $1,494.99 an ounce.