* Nikkei gains 1 pct, ex-Japan Asia-Pacific up 0.1 pct
* Optimistic comments on China-U.S. trade talks lifts mood
* Fed's flexible stance, strong U.S. data underpin shares
By Hideyuki Sano
TOKYO, Jan 8 (Reuters) - Asian shares rose for the third straight session on Tuesday as investors bet that Washington and Beijing are inching towards a trade deal and that U.S. Federal Reserve would halt its tightening if economic growth slows further.
Japan's Nikkei .N225 rose 1.0 percent while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up 0.1 percent.
On Wall Street, the S&P 500 .SPX gained 0.7 percent on Monday following 3.4 percent surge on Friday, with Amazon.com Inc AMZN.O and Netflix NFLX.O leading the rally. .N
Gains in tech names allayed some fears, sparked by Apple (NASDAQ:AAPL)'s sales warnings last week, that the high-flying sector is starting to be hurt by the Sino-U.S. trade war.
U.S. Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that "we can live with" as dozens of officials from the world's two largest economies resumed talks in a bid to end their trade dispute. Foreign Ministry said Beijing had the "good faith" to work with the United States to resolve trade frictions, but many analysts doubt the two sides can reach a comprehensive agreement on all of the divisive issues before a March deadline.
Investor also continued to buy battered stocks in response to strong U.S. job data on Friday and comments by Fed Chairman Jerome Powell that he was aware of the risks and would be patient and flexible in policy decisions this year.
Powell's comments have eased market concerns that the U.S. central bank might ignore signs of an economic slowdown and stick to its script of two rate hikes this year.
"Various concerns markets had earlier are receding for now. Still, there's no denying that U.S. earning momentum is slowing," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
"Ultimately we need to see whether upcoming earnings reports can dispel market concerns."
The U.S. dollar is losing momentum as investors wind back expectations of rate hikes and a future widening in its yield advantage. But conditions in most other developed economies aren't much to write home about, either, potentially limiting the upside for other major currencies.
The euro traded at $1.1474 EUR= , near Wednesday's two-month high of $1.1497.
British and European officials are discussing the possibility of extending Britain's formal notice to withdraw from the European Union amid fears a Brexit deal will not be approved by March 29, The Daily Telegraph reported, citing unidentified sources. market currencies benefited even more, with MSCI emerging market currency index .MIEM00000CUS rising 0.9 percent in the last two days to levels last seen in late July.
The safe-haven yen has erased almost all of its sharp losses made in a flash crash fall last week and last stood at 108.68 to the dollar JPY= .
The 10-year U.S. Treasuries yield US10YT=RR bounced back to 2.698 percent, from Friday's low of 2.543 percent, a trough last seen almost a year ago. Still, that is more than 50 basis points below its October peak of 3.261 percent.
Oil prices also rebounded further from 1-1/2-year lows reached in December, drawing support from a Wall Street Journal report that Saudi Arabia is planning to cut crude exports to around 7.1 million barrels per day (bpd) by the end of January.
OPEC and its allies are trying to rein in a surge in global supply, driven mostly by the United States, where production surpassed 11 million bpd in 2018. Record high crude oil production has pushed up U.S. inventories.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 0.5 percent to $48.76 a barrel. (Editing by Kim Coghill)