* Japan markets rattled by news PM Abe set to resign
* Dollar gains versus yen as Fed pushes new strategy
* Longer-dated Treasuries yields rise, curve steepens
* Asian shares mixed in choppy trade
By Stanley White and Katanga Johnson
TOKYO/WASHINGTON, Aug 28 (Reuters) - Japanese financial markets were roiled in afternoon trade on Friday after news that Japanese Prime Minister Shinzo Abe will resign for health reasons later on in the day.
The Abe development hit markets as investors were still coming to terms with an overnight move by U.S. Federal Reserve to shift its policy framework by placing more emphasis on boosting economic growth and less on worries about letting inflation run too high.
The Fed's move pushed up longer dated U.S. paper and largely supported stocks, while the Japanese share market sold off sharply and the yen rose in the wake of the Abe news.
The 10-year U.S. Treasury US10YT=RR yield rose to 0.7870%, the highest since June 10, which caused the yield curve to steepen, reflecting the Fed's tolerance for higher inflation.
The dollar fell against most major currencies on the Fed's new policy framework. Gold prices XAU= erased early gains and edged higher.
The yen JPY=D3 pulled back from a two-week low and rose to 106.36 against the dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.25% in choppy trade. U.S. stock futures ESc1 rose 0.6%.
Australian stocks .AXJO fell 0.62%. Shares in China .CSI300 rose 1.04%, while Tokyo stocks .N225 erased losses and fell 1.14%
Eurostoxx 50 futures STXEc1 rose 0.54%, German stock futures FDXc1 gained 0.6% and FTSE futures FFIc1 rose 0.49%.
U.S. oil futures fell due to easing concern about the impact of a hurricane that struck the centre of the U.S. oil industry, but Brent futures were marginally higher.
Markets swirled after Fed Chairman Jerome Powell laid out a policy that aims for 2% inflation on average so that too low a pace would be followed by an effort to lift inflation "moderately above 2% for some time." comments were widely expected, but some traders in Asia were disappointed that the Fed did not reveal more details about how the new framework will work or provide any clues to what it will do at its next policy meeting.
"Average inflation had been talked up quite a bit, so we knew this was coming," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo.
"But Powell really didn't reveal much beyond that. Some people who were expecting a clearer steer on policy or some kind of cap on bond yields are left disappointed."
Dallas Fed President Robert Kaplan later said the new policy framework is not a commitment to future action, which contributed to confusion about how it will work, Daiwa's Ishizuki said. Wall Street, the Dow Jones Industrial Average .DJI rose 0.57%, the S&P 500 .SPX gained 0.17%, both setting new intraday highs.
The Nasdaq Composite .IXIC dropped 0.34%.
Stocks also rose on news that Abbott Laboratories (NYSE:ABT) ABT.N won U.S. marketing authorization for a COVID-19 portable antigen test that can deliver results in 15 minutes and will sell for $5. Abbott's shares rose 7.9%. yen jumped on a bout of risk aversion as the reports of Abe's resignation rattled traders.
Japan's national broadcaster NHK said Abe was set to resign to avoid causing problems to the government due to a worsening of a chronic health condition. A source subsequently told Reuters he Abe has decided to resign.
There has been speculation about his health all week. is a negative for Japanese stocks because it raises questions about what polices come next. We do see the familiar pattern of falling stocks pushing up the yen," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
"But the important point is U.S. stock futures remain in positive territory, showing sentiment is holding up."
Spot gold XAU= advanced 0.72% to $1,942.71 as traders considered the Fed's new stance on inflation.
U.S. crude CLc1 futures fell 0.14% to $42.98 a barrel after U.S. refiners avoided the worst of a storm that struck the U.S. Gulf Coast. Brent crude LCOc1 futures rose 0.2% to $45.10 a barrel.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global assets
http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Emerging markets
http://tmsnrt.rs/2ihRugV MSCI All Country Wolrd Index Market Cap
http://tmsnrt.rs/2EmTD6j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>