FILE PHOTO: A passerby walks past an electric monitor displaying various countries' stock price index outside a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issei Kato/File Photo

By Wayne Cole

SYDNEY (Reuters) - Stocks got off to a cautious start in Asia on Monday ahead of an action-packed week that is seemingly certain to see the U.S. Federal Reserve resume its easing cycle, and perhaps leave the door wide open to a series of cuts.

The Bank of Canada is also expected to cut rates by a quarter point this week, while the Bank of Japan and the Bank of England also meet and are both expected to hold rates steady. Traders are less certain about Norway's Norges Bank, with a cut this week priced at a little more than a coin toss.

Markets are 100% priced for an easing of 25 basis points from the Fed, taking its funds rate to 4.0-4.25%, with futures implying just a 4% chance of 50 basis points.

Just as important will be Fed members' "dot plot" projections for rates and guidance from Fed Chair Jerome Powell on the extent and pace of any further easing.

Futures already have 125 basis points of cuts priced in, so anything less than dovish will disappoint investors.

"After cutting policy rates 25bp, Chair Powell is likely to guide toward a series of further rate cuts, noting that downside risk to employment has increased further following recent softer jobs data," said Andrew Hollenhorst, chief U.S. economist at Citi, who sees reductions at each of the next five meetings.

"We expect median "dots" to signal 75bp of rate cuts this year and for Chair Powell to indicate that rate cuts at upcoming meetings are likely given the shifting balance of risks."

President Donald Trump continued his attacks on the central bank on Sunday, saying Powell was incompetent and hurting the housing market.

A holiday in Japan made for a slow start, with the euro showing scant reaction to Fitch's downgrade of France.

The single currency was holding steady at $1.1728, a short way from its recent top of $1.1780. The dollar was flat on the yen at 147.58, but well within the 146.22 to 149.13 range of the past month or so.

The euro has been underpinned by a steady outlook for EU rates with the European Central Bank signalling it was in a "good place" on policy. A host of ECB officials are due to speak this week, including President Christine Lagarde.

CHINA DATA

EUROSTOXX 50 futures inched up 0.1%, while FTSE futures fell 0.1% and DAX futures were flat. S&P 500 futures and Nasdaq futures were both little changed.

While the Nikkei was shut for the holiday, futures stood at 44,590, just below the cash close of 44,768, having climbed more than 4% last week. South Korea's market hit another record after the government scrapped a plan to raise taxes on stock investment.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat.

Chinese blue chips rose 0.5%, while Hong Kong's Hang Seng index edged up 0.2%.

Data on Monday showed the Chinese economy lost some momentum in August, with a slew of activity indicators coming below forecasts. Its industrial output expanded at 5.2%, slowing from the 5.7% pace of the previous month, while retail sales rose only 3.4% from a year ago.

Falls in property investment deepened while home prices fell another 0.3% in August, extending a downward trend that has persisted since early 2023.

U.S. and Chinese officials concluded a first day of talks in Madrid on Sunday on their strained trade ties, and will resume them later on Monday.

Trump said he was still negotiating on the divestiture deadline for Chinese short-video app TikTok, while pressuring Washington's allies to place tariffs on imports from China over its purchases of Russian oil.

The threat of further sanctions on Russia offered some support to oil prices, though concerns about slowing U.S. demand and increased production from OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, were dominating for the moment. [O/R]

Brent rose 0.4% to $67.27 a barrel, while U.S. crude firmed 0.5% to $63 per barrel.

Gold was down 0.1% at $3,639 an ounce, not far from last week's all-time high of $3,673.95. [GOL/]

The cash Treasuries market was closed due to the holiday in Japan. Yields on 10-year Treasuries last stood at 4.07%, having hit a five-month low of 3.994% last week as a run of soft labour data added to the case for aggressive Fed easing.

The three-month average of nonfarm payrolls has slowed to 29,000, well below the 10-year trend of 145,000 and too low to stop the unemployment rate from rising over time.

(Reporting by Wayne Cole and Stella Qiu; Editing by Lincoln Feast and Muralikumar Anantharaman)