Updates prices as of 0530 GMT

By Stella Qiu

SYDNEY, Sept 27 (Reuters) -Chinese stocks raced toward their best week since 2008 and helped lift Asian shares to 2-1/2-year highs after Beijing rolled out a huge stimulus package to revive the economy, while a sharp fall in oil prices bodes well for disinflation globally.

The Japanese yen fell 1% to three-week lows as markets bet Sanae Takaichi, the economic security minister who opposed interest rate hikes, could win the leadership contest of Japan's ruling Liberal Democratic Party on Friday.

European sharemarkets are set to open slightly higher, with EUROSTOXX 50 futures STXEc1 adding 0.2% and FTSE futures FFIc1 up 0.1%. Wall Street futures were largely flat.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.5%, having hit its highest level since February 2022 earlier in the day. It was headed for a weekly gain of 5.3%, thanks to a huge turnaround in Chinese shares.

China's blue chips .CSI300 jumped 3.5%, bringing the weekly rise to 14.6%, the most since November 2008.

Hong Kong's Hang Seng index .HSI also gained 1.9% and was up 11.2% for the week, its best performance since 2009.

"Beijing seems finally determined to roll out its bazooka stimulus in rapid succession... Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets," said Ting Lu, chief China economist at Nomura.

"But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilize the property sector, which is now in its fourth year of contraction."

As flagged, the People's Bank of China on Friday lowered banks' reserve requirement ratio by 50 basis points and cut the 7-day reverse repo rate by 20 bps. It also cut the 14-day reverse repo rate by 20 bps, the second reduction this week.

Reuters reported on Thursday that China planned to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of a fresh fiscal stimulus.

Commodities have had a good week on Chinese stimulus. Iron ore prices SZZFV4 clambered back above $100 a metric ton, copper broke above the key $10,000 a ton mark, gold XAU= hit another record and silver XAG= scaled a 12-year top.

Oil was a loser and set for heavy weekly losses on a report that Saudi Arabia was preparing to abandon its unofficial price target of $100 a barrel for crude as it gets ready to increase output. O/R

Brent futures LCOc1 fell 0.4% to $71.31 a barrel and are down 4.2% for the week. That should be good for global disinflation as central banks ramp up rate cuts, and bullish for consumer spending.

YEN SKIDS

Results from Japan's Liberal Democratic Party's first-round balloting showed economic security minister Sanae Takaichi, 63, and former defence minister Shigeru Ishiba, amassed the most votes and qualified for the second round expected to conclude at 0630 GMT.

Markets are already betting Takaichi - a vocal critic of the Bank of Japan's efforts to raise interest rates - could win as swaps imply there is just a 30% chance that the central bank could lift rates again by the year end. 0#BOJWATCH

The dollar rose 1% to 146.23 yen JPY=EBS after the first round of balloting. The Nikkei .N225 rallied 1.8% and was up 5% for the week on the back of a weak yen.

"Risks of the BOJ being pushed to the dovish side are weighing on the yen now, but we have to remember that narrowing of the yield differentials, which is a key driver for yen, will likely remain Fed-driven and in favour of the yen," said Charu Chanana, head of currency strategy at Saxo.

Treasury yields were steady in Asia, having risen overnight on low U.S. weekly jobless claims that led markets to lower the odds of another outsized half point rate cut from the Fed in November to 51%, from 57% a day earlier.

Investors are waiting for the core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation - later in the day. Forecasts are centred around a small monthly rise of 0.2%, as markets are split on the size of an expected Federal Reserve rate cut in November.

Two-year Treasury yields US2YT=RR were up 6 bps this week to 3.6348%, while 10-year yields US10YT=RR rose 7 bps in the week to 3.789%.

Reporting by Stella Qiu; Additional reporting by Ankur Banerjee; Editing by Jamie Freed and Shri Navaratnam

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