* Powell: Fed will react "as appropriate" to trade war risks
* Asian stock markets: tmsnrt.rs/2zpUAr4
* Wall St stocks jump; 10yr Treasury yield off 21-mth low
* Dollar remains under pressure, hovers near 7-week low
By Tomo Uetake
Tokyo, June 5 (Reuters) - Asian shares tracked the Wall Street rally on Wednesday after U.S. central bank comments pointed to the increasing prospects of an interest rate cut, boosting investor sentiment and pushing the dollar lower.
The rebound in stock prices also prompted U.S. bond yields to step up from their recent lows, with the 10-year yield off its 21-month low hit earlier in the week.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4%, while Japan's Nikkei average climbed 1.9%.
Supporting the market cheer, Federal Reserve Chairman Powell on Tuesday dropped his standard reference to the central bank being "patient" in its approach to any rate decision, instead saying the Fed would respond "as appropriate" to the risks posed by a global trade war and other recent developments.
The comments were interpreted by investors as a clear nod to a policy easing.
"Powell gave the markets a reason to rally but I think it's a short-covering bounce, rather than a trend reversal. It's just the markets have priced in much of the news to come," said Yasuo Sakuma, chief investment officer at Libra Investments.
On Wall Street, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite clocked their biggest one-day gains in five months.
Uncertainties over how, or if, the United States will settle its trade conflict with its key trade partners, notably China, has kept many investors on edge.
U.S. Treasury Secretary Steven Mnuchin meets with People's Bank of China Governor Yi Gang at the G20 finance leaders meeting this weekend in Japan, a Treasury spokesman said on Tuesday.
Chinese President Xi Jinping said the country's economy is stable, healthy and well placed to meet all risks and challenges, according to a transcript published by the Xinhua news agency.
In the foreign exchange market, major currencies were on the sidelines for now.
The greenback hit a seven week-low of 96.995 against a basket of six major currencies overnight. The index was last quoted at 97.096, little changed on the day. The euro fetched $1.1258, almost steady on the day.
The pound recovered on Tuesday, after suffering its 4th consecutive week of losses against the euro, but concerns about a disorderly departure from the European Union meant gains were minimal, amid promises from U.S. President Donald Trump of a "phenomenal" post-Brexit trade deal. Sterling was last quoted at $1.2701.
Other major currencies were relatively calm, with the safe-haven yen still supported but not aggressively so. The dollar was holding at 108.13 yen, flat on the day.
In commodity markets, oil prices ended as much as 1% higher on Tuesday after a global stock market rally pulled Brent crude from a four-month low touched earlier in the session.
In early Asian trade, U.S. crude retreated 0.3% to $53.33 a barrel and Brent crude futures stood almost flat at $61.95 per barrel.
Reporting by Tomo Uetake; Editing by Sam Holmes