* MSCI AxJ up 0.3% to two-week peak
* ASX up 1% after expansionary budget, QE hopes lift AU bonds
* Currency, bond markets await Fed minutes
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, Oct 7 (Reuters) - Asian stock markets hit a two-week high on Wednesday, brushing off a Wall Street tumble and a drop in commodity prices after U.S. President Donald Trump abruptly cancelled talks with lawmakers on coronavirus-relief spending plans.
Trump broke off talks with Democrats in a Tweet, saying that negotiations will stop until after the election, when he promised a major stimulus bill. sent U.S stocks on their steepest drop in two weeks, pushed oil sharply lower and lifted safe assets like the dollar and bonds.
Investors in Asia, however, seemed less rattled, figuring that whoever wins the U.S. presidential election will inherit an economy hungry for stimulus and will probably apply it.
S&P 500 futures ESc1 were last up 0.2% and European futures only slightly negative, with Euro STOXX 50 futures STXEc1 down 0.4% and FTSE futures FFIc1 down 0.2%.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS crept 0.4% higher to a fresh two-week peak, led by a 1.3% gain in Australia .AXJO where an expansionary budget lifted stocks. .AX
"One way or another we're going to get some stimulus, it's just we're not going to get it now," said ING's chief economist in Asia, Rob Carnell. "So we'll tread water for a bit."
Currency markets and bond markets were broadly steady. The euro EUR= held at $1.1730. The risk-sensitive Antipodean currencies crept higher, with the Aussie AUD=D3 up 0.3% to $0.7120 and the kiwi NZD=D3 up 0.1% to $0.6592. FRX/
The yield on benchmark U.S. 10-year government debt US10YT=RR rose 1 basis point to 0.7536%. US/
Investors are awaiting minutes from the U.S. Federal Reserve's September meeting due at 1800 GMT for guidance as to how the central bank plans to push inflation higher and how long it might let it run above 2% before tightening its ultra-loose monetary policy. government bonds rallied in anticipation of quantitative easing from the central bank and a lower cap on three-year yields AU3YT=RR YTTc1 , which fell to a record low of 0.138%. AUD/
SUBHEAD
On Wall Street on Tuesday the Dow .DJI fell 1.3%, the S&P 500 .SPX dropped 1.4% and the Nasdaq .IXIC fell 1.6%. .N
A 2% jump in Alibaba (NYSE:BABA) 9988.HK on Wednesday, amid small but broad gains by China-exposed retailers and financials listed in Hong Kong .HSI further underlined the contrast between uncertainty in the United States and economic recovery in China.
Chinese stock, equity, currency and bond markets are closed until Friday for a long national holiday that is expected to drive hundreds of millions of domestic trips and a spike in consumption, which has been a weak spot.
"China is going to lead the world out of COVID the same way it led the world out of the (financial crisis)," said Jim McCafferty, Joint Head of APAC Equity Research at Nomura in Hong Kong.
"The other big market in Asia is Japan," he said. "You've got political stability, stronger virus control...and 20% of Japanese earnings are coming from China - I think people are beginning to realise this."
Japan's Nikkei .N225 eased 0.2% on Wednesday, but has avoided the selloffs that have dragged on U.S. markets in recent weeks. .T
In commodity markets, oil futures gave up some of their recent gains amid supply concerns.
A larger-than-expected buildup in U.S. crude stocks had West Texas Intermediate futures CLc1 down about 1.8% to $39.95 a barrel. Brent crude futures LCOc1 fell 1.5% to $42.03 a barrel. O/R
Spot gold XAU= recovered slightly to $1,883 an ounce after being whacked by a rising dollar on Tuesday.
"Trump applied the salt in the gold investor's wounds when he pinpricked the stimulus balloon," said Stephen Innes, Bangkok-based market strategist at FX broker Axi.
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