(Adds comments, updates prices throughout)
* Asian stock markets : tmsnrt.rs/2zpUAr4
* MSCI Asia-Pacific ex-Japan up, Hang Seng hits 7-week high
* Dollar index near 1-1/2 year peak
* China, U.S. could reach a deal - Trump adviser Kudlow
* British pound among worst performers, on Brexit news
* European shares seen rising 0.4-0.5 pct
By Swati Pandey and Hideyuki Sano
SYDNEY/TOKYO, Nov 28 (Reuters) - Asian shares posted modest gains on Wednesday on hopes Beijing will take steps to support the economy and as investors tried to decipher conflicting signals on prospects for de-escalating the Sino-U.S. trade dispute.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.7 percent, led by advance in Taiwan and China.
Japan’s Nikkei gained 1.0 percent. Hong Kong’s Hang Seng index rose as much as 1.4 percent to hit a more than seven-week high while mainland blue-chip shares climbed 1.3 percent.
“The Chinese government would really not want to let share prices fall further given the problem of shares pledged as collateral by firms,” said Naoki Tashiro, president of TS China Research in Tokoname, Japan.
European shares are expected to open higher, with financial spreadbetters pointing to gains of 0.4-0.5 percent in Britain’s FTSE, France’s CAC and Germany’s DAX.
After President Donald Trump rattled investors by talking tough ahead of a highly-anticipated meeting with Chinese President Xi Jinping in Argentina on Saturday, White House economic adviser Larry Kudlow sought to brighten the mood by holding open the possibility that the two countries would reach a trade deal.
Beijing’s ambassador to Washington, Cui Tiankai, told Reuters that China is going to the G-20 summit hoping for a deal to ease a damaging trade war with the United States, though he warned of dire consequences if U.S. hardliners try to separate the world’s two largest economies.
Markets were shaken on Tuesday after Trump told the Wall Street Journal it was “highly unlikely” he would accept China’s request to hold off on a planned increase in tariffs to 25 percent from 10 percent.
All in all, it was still unclear whether the two sides had agreed on a formal agenda for the Trump-Xi meeting after the G20 summit and Kudlow said there were no scheduled talks on the ground for their advisers.
Also on Tuesday, a German magazine published a report citing European Union sources saying Trump could impose tariffs on imported cars from next week, which sent 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 97.497 to edge towards a 1-1/2 year top of 97.661 earlier this month. It was last at 97.349.
Investors will now turn attention to a speech on Wednesday by Federal Reserve Chair Jerome Powell for further clues on how many more times the U.S. central bank is likely to raise interest rates.
The event has become more critical as signs of a global slowdown and nearly two months of market volatility have clouded an otherwise rosy U.S. picture, prompting speculation the Fed will go slow on rate hikes next year.
Traders will watch the speech in light of Trump’s criticism of Powell in a newspaper interview in which the president said interest rates and other Fed policies were damaging the U.S. economy.
In the foreign exchange market, the pound was among the worst performing major currencies overnight. It was last flat at $1.2748.
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 Dec. 11 parliamentary vote on her Brexit deal but that looks difficult with an apparent large majority of lawmakers - including the Scottish National Party with 35 of Scotland’s 59 seats in parliament - opposed to it.
Elsewhere bitcoin jumped 6 percent to above $4,000, extending its rebound from a low of $3,475 touched on Sunday.
In commodity markets, oil was cautiously higher ahead of an OPEC meeting next week at which the producer club is expected to decide on some form of supply cut to counter an emerging glut.
The shutdown of Britain’s largest North Sea oilfield for repairs also supported prices.
U.S. crude futures added 78 cents to $52.34 a barrel. Brent climbed 87 cents to $61.08.
Despite a rise early Wednesday, oil prices have still fallen by almost one-third since early October, weighed down by the supply overhang and widespread weakness in financial markets.
Editing by Shri Navaratnam and Richard Borsuk