Asian shares mostly edged higher on Thursday as the signs that the US Federal Reserve won't be as aggressive as feared in tightening policy boosted investors' confidence.

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MSCI's broadest index of Asia-Pacific shares gained 0.27 percent, while Nikkei fell 0.29 percent on worries that Russia could invade Ukraine. MSCI's equivalent regional index, which excludes Japan, surged 0.64 percent. Hong Kong's Hang Seng also traded 0.46 percent higher. Australia's benchmark S&P/ASX 200 rose 0.65 percent as higher metals prices outweighed geopolitical concerns. South Korea's Kospi also gained 1.38 percent.

US S&P 500 futures slipped 0.07 percent. Markets remain on edge after Western countries including the US warned on Wednesday that Russia's military presence on Ukraine's borders was growing, rather than shrinking as Moscow has insisted.

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Indian stock markets gave up early gains on Thursday and the BSE's benchmark equity index Sensex was nearly 100 points down at 10:17 points.

At the same time, worries about a super-hawkish Fed rate-tightening campaign, potentially including a 50 basis-point hike next month, took a step down overnight after minutes of the latest policy meeting signaled a more measured, data-dependent approach from central bank officials.

The less hawkish Fed minutes are a positive sign that markets can re-adjust after previously pricing in aggressive rate hikes, Reuters quoted as saying Trinh Nguyen, a senior economist at Natixis.

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Money markets see about 43 percent odds of a half-point hike on March 16, and about 150 basis points of tightening in total this year.

US Treasury yields continued their retreat in Asia on Thursday, with the 10-year yield easing about 2 basis points to 2.03 percent, pressured both by bets for a less hawkish Fed and demand for safe haven assets amid Ukraine uncertainty. The US dollar index, which measures the currency against six major peers, edged 0.06 percent lower to 95.770.

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A softer dollar and lower yields combined with subdued risk sentiment helped to keep gold near an eight-month peak at $1879.48, reached Tuesday. It last traded around $1,868 an ounce.

Crude oil retreated, though, amid optimism that negotiations will salvage Iran's 2015 nuclear deal, with US West Texas Intermediate (WTI) crude trading down $2.50 at $91.16 a barrel and Brent down $2.43 at $92.38.

Oil markets have been dominated in recent weeks by the threat of Russia invading Ukraine, with concerns that supply disruptions from the major producer in a tight global market could push oil prices to $100 a barrel. Mizuho said any relief about Ukraine is premature, if not unfounded.

"As tensions run high and markets assess the fluid risks of Russian invasion of Ukraine, dips in risk aversion could reverse abruptly," the bank's analysts wrote in a research note. "The fear is that Russia-Ukraine risks may become entrenched, maybe even normalized."

-With agency inputs

First Published:Feb 17, 2022 9:37 AM IST