* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Asia aided as strong retail earnings lift Wall St
* Fed minutes show division on rate cuts, yields rise
* Trump says no longer looking at tax cuts
* PMI surveys, ECB minutes due later Thursday
By Wayne Cole
SYDNEY, Aug 22 (Reuters) - Asian shares edged ahead on Thursday after Wall Street got a boost from strong retail results, while bonds retreated as U.S. policy makers sounded conflicted on whether to cut interest rates as sharply as markets were wagering.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.1%, continuing the see-saw pattern of recent sessions.
Japan's Nikkei .N225 added 0.4% and Australian shares .AXJO 0.3%, while E-Mini futures for the S&P 500 ESc1 rose 0.2%.
On Wall Street, the Dow .DJI had gained 0.93%, while the S&P 500 .SPX rose 0.82% and the Nasdaq .IXIC 0.90%. .N
The bounce was led by retailers, with Target Corp (NYSE:TGT) TGT.N surging 20% and Lowe's Cos Inc LOW.N 10% after upbeat results.
Minutes of the Federal Reserve's July meeting showed policymakers were deeply divided over whether to cut interest rates, but were united in wanting to signal they were not on a preset path to more easing. while a "couple" of Fed members favoured a deeper cut of half a point, "several" favoured no change at all.
That reluctance did not seem to gel with the market's aggressive pricing for over 100 basis points of easing by the end of 2020. FEDWATCH
Treasuries were sold in response and two-year yields US2YT=RR rose to 1.59% and away from last week's low of 1.467%. US/
"The key message from the Fed minutes is that the 25 basis-point cut in July was just a calibration, a mid cycle adjustment and not the start of a new easing cycle," said Rodrigo Catril, a senior FX strategist at NAB.
Hopes for U.S. fiscal stimulus also got a knock when President Donald Trump reversed course and said he was not looking at cutting payroll taxes. POWELL
Much now depends on how dovish Fed Chair Jerome Powell chooses to be in his Jackson Hole speech on Friday.
"The most sensitive comments will revolve around whether Powell is willing to reaffirm a view that the easing cycle is a "mid-cycle adjustment" or align more closely to market thinking," said Alan Ruskin, macro strategist at Deutsche Bank (DE:DBKGn).
"If he sticks to the old language as is most likely, it would affirm that he is still confident that the strength of consumption, in combination with modest Fed easing, will be sufficient to keep the recovery broadly on track."
That would be more hawkish than expected and would likely lift the dollar further, he said.
The dollar had already bounced overnight, rising to 98.263 on a basket of currencies .DXY from a low of 97.948. It also reached 106.57 yen JPY= from a trough of 106.21.
The euro edged back to $1.1089 EUR= from a top of $1.1107, not helped by a gloomy economic outlook from Germany's finance ministry. range of manufacturing surveys from across the globe are due later on Thursday and risks are they will show a further slowdown in activity, especially in Europe.
Also due are minutes from the European Central Bank's last policy meeting and markets are looking for more detail on exactly when and how aggressively it might ease policy.
In commodity markets, spot gold was steady at $1,502.53 XAU= .
Oil prices firmed after U.S. government data showed a drawdown in domestic crude stocks. O/R
Brent crude LCOc1 futures rose 25 cents to $60.55, while U.S. crude CLc1 gained 34 cents to $56.02 a barrel.
https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations
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^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam)