* Asian stock markets : tmsnrt.rs/2zpUAr4
* MSCI ex-Japan rises, gains led by China
* China-U.S. tentative agree to trade truce - SCMP
* Market pares bets for half-point Fed rate cut in July
By Swati Pandey and Wayne Cole
SYDNEY, June 27 (Reuters) - Asian shares crept higher on Thursday following a media report the United States and China have tentatively agreed to a truce ahead of a highly-anticipated weekend meeting of the two nations' leaders in Tokyo.
The South China Morning Post (SCMP), citing sources, said Washington and Beijing were laying out an agreement that would help avert the next round of tariffs on an additional $300 billion of Chinese imports.
On Wednesday, U.S. President Donald Trump said a trade deal with his Chinese counterpart Xi Jinping was possible this weekend though he was prepared to impose tariffs on virtually all remaining Chinese imports if talks fail.
"But the truce cake seems to have been baked," the SCMP cited one of its sources as saying.
Hopes the world's two biggest economies would finally reach an agreement were enough to cheer investors, sending MSCI's broadest index of Asia-Pacific shares outside Japan up 0.8%.
China led the gains with its blue-chip index up 0.9%. South Korea's KOSPI index added 0.6% while Hong Kong's Hang Seng and Japan's Nikkei jumped about 1.2% each.
The rally in Asia filtered through to other regions as well. E-Minis for the S&P500 climbed 0.4% in late Asian trading while futures Eurostoxx 50 rose 0.3% and those for London's FTSE added 0.1%.
"A truce would be a short-run positive for markets," analysts at Bank of America-Merrill Lynch wrote in a note. "But investors will likely start to worry unless we move toward a deal," they added.
"In the medium term, however, the trade war will likely continue to erode business confidence, weighing on the United States, China and regions caught in the crossfire, such as Asia-Pacific and Europe."
The trade row has already rattled investors who have ditched shares for the safety of bonds and gold this year. It has also prompted the U.S. Federal Reserve to shift course as it paused its rate tightenings and signaled a cut as soon as next month.
Many traders were still circumspect and expected the market to remain in a narrow range until after the weekend meeting of G20 leaders in Osaka, Japan, where Trump is also holding bilateral talks with other nations.
"Focus continues to be on the G20 meeting with a story in the SCMP...lifting the entire market, although the details suggest nothing has actually been agreed yet," JPMorgan said in a note.
"Overall it seems more likely that tariffs are hiked than not, following the meeting, though the timing of this may be confused by a desire for positive optics."
Trump weighed into U.S. monetary policy on Wednesday, accusing Fed Chairman Jerome Powell of doing a "bad job" and "out to prove how tough he is" by not cutting interest rates.
Markets are convinced the Fed will indeed ease at its next meeting in July, but had to scale back bets on a half-point cut following cautious comments from various policy makers.
Futures are 100% priced for a cut of 25 basis points next month, and imply a 22% chance of 50 basis points.
The probability of a less aggressive Fed and expectations of a Sino-China trade truce helped ease the selling pressure on the U.S. dollar, which rose 0.2% to 96.348 on a basket of currencies from a three-month trough of 95.843.
The dollar bounced modestly against the yen to 108.13 and away from a low of 106.77. The euro likewise eased back to $1.13505 from a top of $1.1412.
The dollar's gains took a little of the shine off gold, which broke a six-session winning stretch and eased to $1,403.94 per ounce.
Oil prices ran into profit-taking, having gained overnight on a larger-than-expected drawdown in crude stocks as exports hit a record high and surprise falls in refined product stockpiles.
Brent crude futures eased 23 cents to $66.26, while U.S. crude lost 25 cents to $59.13 a barrel.
Editing by Sam Holmes & Shri Navaratnam