* Powell: Fed will react "as appropriate" to trade war risks
* Wall St stocks jump; 10-year Treasury yield off 21-month low
* Asian stock markets: tmsnrt.rs/2zpUAr4
* European stocks seen opening flat to higher
* Dollar remains under pressure, hovers near 7-week low
By Tomo Uetake
Tokyo, June 5 (Reuters) - Asian shares advanced on Wednesday after comments from Federal Reserve officials suggested a U.S. rate cut this year was on the cards, boosting investor sentiment and pushing the dollar lower.
The early momentum came from Wall Street's overnight rally, helping lift MSCI's broadest index of Asia-Pacific shares outside Japan 0.4%, while Japan's Nikkei average climbed 1.8%.
Chinese shares also rebounded, with the benchmark Shanghai Composite up 0.4% and the blue-chip CSI 300 rising 0.5%, while Hong Kong's Hang Seng advanced 0.5%.
European shares were expected to open flat to slightly higher, with futures for Britain's FTSE opening flat and Germany's DAX ticking up 0.1%.
Underpinning the better mood in markets, Federal Reserve Chairman Jerome Powell on Tuesday dropped his standard "patient" reference 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 Fed easing. On Tuesday, Australia became the latest major central bank to cut rates, following on from New Zealand last month. India is also expected to ease policy at Thursday's meeting for its third-straight rate cut.
"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 bad 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, with all three indexes ending up more than 2% on Tuesday.
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 nadir of 2.061% brushed earlier in the week. It last stood at 2.100%.
Japan's benchmark 10-year bond yield fell to minus 0.130%, its lowest level in nearly three years.
Uncertainties over how, or if, the United States will settle its trade disputes with its key trade partners, notably China, have 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 trod water for now.
The dollar hit a seven week-low of 96.995 against a basket of six major currencies overnight and was last quoted at 96.995, down a marginal 0.1% on the day. The euro fetched $1.1269, up 0.2%.
The pound recovered from a five-month low on Tuesday 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 trading a marginally 0.1% firmer at $1.272.
Other major currencies were relatively calm, with the safe-haven yen still supported but demand was limited. The yen firmed 0.1% against the dollar to 108.00 yen.
In commodity markets, oil prices resumed their slide on Wednesday, dragged down by a surprise gain in U.S. inventories and comments from the head of Russian state oil producer Rosneft questioning the point of a deal with OPEC to withhold supplies.
In Asian trade, U.S. crude retreated 0.9% to $52.98 a barrel and Brent crude futures dropped 0.7% to $61.55 per barrel.
Editing by Jacqueline Wong & Shri Navaratnam