GLOBAL MARKETS-Stocks turn negative as India-Pakistan tensions worsen

* Pakistan says it shot down two Indian jets

* Fed chairman reaffirms "patient" approach to raising rates

* European share markets expected to open lower

* Trump, Kim to start 2-day summit in Hanoi on Wed

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

TOKYO, Feb 27 (Reuters) - Asian shares and Wall Street stock futures turned negative on Wednesday after Pakistan said it had shot down two Indian jets in its territory, sending investors out of riskier markets and into more conservative choices such as the yen.

Islamabad said on Wednesday it had carried out airstrikes in Indian-controlled Kashmir and shot down two Indian jets in its own airspace, capturing one of the pilots as the risk of conflict between the nuclear-armed neighbors escalates.

The dollar remained near a three-week low, weighed by earlier comments from Federal Reserve Chairman Jerome Powell who on Tuesday reiterated the central bank's shift to a more "patient" policy approach.

Indian bonds, stocks and the rupee all sold off. The flare up in geopolitical risks hit broader sentiment, driving investors out of stocks and into safe-haven assets with U.S. stock futures slipping and the Japanese yen gaining.

"It shows to be one risk in Asia that was probably a little bit underestimated in the past," said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong.

"With the events of the last few days, we're seeing now the market's paying closer attention."

MSCI's broadest index of Asia-Pacific shares outside Japan turned negative and was last down nearly 0.2 percent, after trading in positive territory most of the day.

The news also weighed on European markets, with futures for London's FTSE and those for Frankfurt's DAX both down 0.4 percent.

China's blue-chip CSI300 fell 0.2 percent while Hong Kong's Hang Seng Index, reversed earlier gains to edge down 0.1 percent.

Earlier in the Asian day, Japan's Nikkei share average finished the session up 0.5 percent while Australian stocks gained 0.4 percent.

U.S. stock futures for the S&P 500 were last down 0.2 percent. Trading in the contracts had been delayed for several hours following a technical disruption earlier in the session.

"There is a fear in the market that sentiment has got a bit carried away on the positive side, especially given the experiences we had through October and through December, when we had some really sharp downward corrections," said Nick Twidale, Sydney-based chief operating officer at Rakuten Securities Australia.

"A lot of investors are wary of seeing something along those lines," he added.

Powell, spelling out the Fed's approach to an economy that is likely slowing, told U.S. lawmakers on Tuesday it is in "no rush to make a judgment" about further changes to interest rates.

In two hours of testimony to the Senate Banking Committee, Powell elaborated on the "conflicting signals" the Fed has tried to decipher in recent weeks, including disappointing data on retail sales and other aspects of the economy that contrast with steady hiring, wage growth, and ongoing low unemployment.

More evidence of the hot and cold economy came overnight, with weaker-than-expected U.S. housing data and a rosy consumer confidence report.

U.S. homebuilding tumbled to a more than two-year low in December as construction of both single and multi-family housing declined, which overshadowed the rebound in consumer confidence in February after three months of declines.

The contrasting data points left Wall Street underpowered, with the benchmark S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite closing down 0.1 percent each.

"Chairman Powell's comments were neutral and the economic data released overnight was mixed, insufficient to provide implications for the Fed's policy and directions to the market," said Yasuo Sakuma, chief investment officer at Libra Investments in Tokyo.

In the currency market, the dollar was softer after the Fed chief's testimony, with its index against major peers dipping more than 0.4 percent to its lowest in three weeks overnight. It recovered a little bit of ground in Asian trade, last trading 0.1 percent higher at 96.138.

The British pound vaulted after Prime Minister Theresa May offered lawmakers the chance to vote on delaying Brexit.

Sterling last traded at $1.3249, having risen to $1.3288 on Tuesday, its highest levels in five months. Against the euro, it hit a 21-month high of 85.63 pence.

The euro was down a tad at $1.1376 after hitting a three-week high of $1.1402 overnight.

Against the Japanese yen, the greenback fell 0.2 percent to 110.395 yen per dollar.

Investors are keeping an eye on the U.S.-North Korean summit, which begins in Hanoi later on Wednesday.

U.S. President Donald Trump and North Korean leader Kim Jong Un were due to meet for their second summit, betting that their personal relationship can break a stalemate over the North's nuclear weapons and end more than 70 years of hostility.

Oil futures rose slightly on Tuesday after news that OPEC planned to continue production cuts despite Trump criticizing the producer group for rising crude prices a day earlier.

U.S. crude futures stood at $55.87 per barrel, up 0.7 percent while Brent was 0.4 percent higher at $65.51 a barrel .

Gold was down 0.2 percent at $1,326.70, 1.5 percent below a 10-month peak of $1,346.70 scaled last Wednesday. (Reporting by Daniel Leussink and Tomo Uetake; Additional reporting by Hideyuki Sano; Editing by Shri Navaratnam, Richard Borsuk and Sam Holmes)