* Asian stock markets : tmsnrt.rs/2zpUAr4
* MSCI ex-Japan a touch softer, Australian shares slip
* Dollar index near 1-1/2 year peak
* China, U.S. could reach a deal - Kudlow
* British pound among worst performers on Brexit news
By Swati Pandey
SYDNEY, Nov 28 (Reuters) - Asian shares dithered on Wednesday and the dollar jumped to a near 1-1/2-year top as risk assets rowed back amid conflicting signals on prospects for de-escalating the Sino-U.S. trade dispute.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last flat with Australian stocks the biggest drag.
Japan’s Nikkei gained 0.5 percent while South Korea’s KOSPI index was a touch firmer.
Asian markets had slipped on Tuesday after U.S. President Donald Trump said in an interview with the Wall Street Journal it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs.
However, White House economic adviser Larry Kudlow sought to brighten the mood by confirming a dinner powwow between Trump and his Chinese counterpart Xi Jinping at an upcoming G20 gathering in Argentina. He also held open the possibility that the two countries would reach a trade deal.
The news boosted Wall Street’s main indexes which finished in positive territory after spending much of the session in the red.
However, it was still unclear whether the two sides had agreed on a formal agenda for the leaders’ meeting after the G20 summit and Kudlow said there were no scheduled talks on the ground for their advisers.
At the same time, a German magazine reported citing EU sources that Trump could impose tariffs on imported cars from next week, sending European auto stocks sharply lower.
“The market mood has turned cautious once again amid a flurry of trade headlines pointing to the prospect of a new round of trade tariffs ahead,” said Rodrigo Catril, senior strategist at National Australia Bank.
“The market seems to be jumping at shadows at the moment and against this backdrop of uncertainty the USD remains the preferred option for weathering the storm.”
The dollar index, which measures the greenback against a basket of major currencies, jumped overnight to 97.363 to edge towards a 1-1/2 year top of 97.661 set earlier this month.
Investors will now turn their attention to a speech on Wednesday by Federal Reserve Chair Jerome Powell for further clues on how many more times the central bank is likely to raise interest rates.
The event has become even more critical as signs of a global slowdown and nearly two months of market volatility have clouded an otherwise rosy U.S. picture, prompting speculations the Fed will go slow on rate hikes next year.
Traders are also watching the speech in light of Trump’s criticism of Powell in a newspaper interview, saying rising interest rates and other Fed policies were damaging the U.S. economy.
Elsewhere, in the foreign exchange market the pound was among the worst performing major currencies overnight.
British Prime Minister Theresa May will take her Brexit sales pitch to Scotland on Wednesday where she will likely face an uphill struggle to convince sceptical voters of the benefits of her deal for businesses.
May needs to win a vote in parliament on Dec. 11 to approve her deal but that looks difficult with an apparent large majority of lawmakers - including the Scottish National Party which has 35 of Scotland’s 59 seats in parliament - opposed to it.
Editing by Shri Navaratnam