* MSCI Asia-Pacific index up 0.3%, Nikkei gains 1%
* Dovish views from Fed's Williams cement rate cutexpectations
* US yields fall, gold hits 6-year high on US rate cutprospect
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Shinichi Saoshiro
TOKYO, July 19 (Reuters) - Asian stocks gained and thedollar sagged on Friday after a top Federal Reserve official allbut cemented expectations of a U.S. interest rate cut laterthis month.
New York Fed President John Williams said on Thursday thatpolicymakers need to add stimulus early to deal with too-lowinflation when interest rates are near zero and cannot wait foreconomic disaster to unfold, in a speech read as a strongargument in favour of quick action.
The comments by Williams made it a virtual certainty the Fedwould opt to cut interest rates by 25 basis points (bps) at itsJuly 30-31 policy meeting and also fuelled expectations of aneven deeper 50 bp reduction.
Financial markets quickly reacted, with futures atone point pricing in almost 70 percent chance of a50-basis-point cut at the month-end meeting. The odds eased toaround 40 percent after the New York Fed clarified later thatWilliams' speech was not about potential action at the upcomingpolicy meeting.
Wall Street shares shook off a sluggish start and movedhigher overnight thanks to the dovish comments by Williams.
Australian stocks added 0.4%, South Korea's KOSPIrose 0.8% and Japan's Nikkei advanced 1%.
MSCI's broadest index of Asia-Pacific shares outside Japanwas up 0.3%, squaring the previous day's losses.
The index was up only 0.3% on the week, as riskier assetswere partly capped by U.S. President Donald Trump's reiterationof his threat to impose further duties on Chinese imports. Thetwo sides resumed talks recently to try and end a year-longtrade war that has rattled financial markets and slowed globalgrowth.
"Dovish Fed policy expectations do provide support for theequity markets, which are set to rebound after suffering lossesthe previous day. But factors such as U.S.-China trade issuesand tensions over Iran are likely to limit the markets' gains,"said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DSAsset Management.
The dollar index against a basket of six majorcurrencies stood little changed at 96.778 after losing roughly0.5% overnight to a two-week low of 96.671 in the wake ofcomments from the Fed's Williams.
The greenback was up 0.15% to 107.460 yen after theNew York Fed tried to clarify Williams' earlier comments,crawling away from a three-week trough of 107.210 marked onThursday when the currency lost 0.6% against its Japanese peer.
The euro was 0.1% lower at $1.1262 after climbing0.45% the previous day.
U.S. Treasury yields were lower across the board in light ofWilliams' dovish views. The 2-year yield was at1.7908% after touching a two-week low of 1.7520%. The 10-yearyield declined to a 10-day trough of 2.023% and waslast at 2.045%.
In commodities, U.S. crude oil futures rose 1% to$55.90 per barrel after slumping 2.6% overnight.
Oil prices had fallen on Thursday amid expectations thatcrude output would rise in the Gulf of Mexico following lastweek's hurricane in the region.
Spot gold extended the previous day's rally made onthe prospects of lower U.S. interest rates and brushed asix-year high of $1,452.60 an ounce, before pulling back a touchto $1,442.25.(Editing by Shri Navaratnam)