* Yen slightly firmer, Nikkei resumes rally to clear 70,000

mark

* BOJ raises interest rates to 1% as anticipated in 7-1 vote

* RBA decision due at 0430 GMT, no change expected

(Adds Bank of Japan decision)

By Gregor Stuart Hunter

SINGAPORE, June 16 (Reuters) - Asian stocks made cautious

gains on Tuesday after a rally in the previous session on news

of a U.S.-Iran peace deal, while investors assessed a widely

expected Bank of Japan rate increase to a 31-year high.

The yen edged up 0.1% to 160.215 against the dollar and the

Nikkei 225 jumped 0.9% to a new all-time peak above

70,000 after the Japanese central bank voted 7-1 to hike its

benchmark policy rate to 1%, levels last seen in 1995.

S&P 500 e-mini futures reversed early losses to

trade flat, while MSCI's broadest index of Asia-Pacific shares

outside Japan was up 0.4%, with Korean shares

rising 2.3%. Stocks in Hong Kong weighed on the

benchmark after weaker-than-expected retail sales and

fixed-asset investment data from China.

Markets settled into a more measured tone on Gulf

developments as the initial excitement over the preliminary

agreement between Washington and Tehran began to fade.

Oil prices, which finished at a three-month low overnight,

reflected the cautious stance, with Brent crude futures

sliding 0.3% to $82.90 a barrel. Shippers in Asia and Europe

said rebuilding confidence in resuming transit through the

Strait of Hormuz could take weeks.

While U.S. President Donald Trump's announcement of a deal

with Iran drew initial investor relief on Monday, it also puts

Washington on a collision course with Israel.

"While it is an important diplomatic breakthrough that

should remove a key source of market volatility, the durability

of the deal is likely to be tested in the future," Westpac

analysts wrote in a research note. "Many sticking points,

including the fate of Iran's nuclear programme, were left to be

resolved in subsequent negotiations."

WALL STREET RALLY

Overnight on Wall Street, stocks and bonds rallied on

optimism over the deal. The S&P 500 jumped 1.7% and the

Nasdaq Composite surged 3.1%, while the Dow Jones

Industrial Average and the STOXX 600 both closed at

record highs.

Beyond geopolitics, traders are also awaiting a decision

from the Reserve Bank of Australia, which is expected to pause

its tightening cycle when it meets later on Tuesday, according

to a Reuters poll of economists.

Later in the day, Bank of Japan Deputy Governor Shinichi

Uchida will hold a press briefing to explain the central bank's

decision, which Governor Kazuo Ueda will miss because he is

undergoing medical treatment.

"We do not anticipate any major changes to the Bank's

assessment of current conditions," analysts from Mitsubishi UFJ

wrote in a research note.

"We expect Deputy Governor Uchida's press conference,

including the rationale he presents for the rate-hike decision,

will be based largely on Governor Ueda's June 3 speech," the

note added. "Mr. Uchida is also likely to follow the governor's

remarks when discussing future policy decisions."

The U.S. dollar index, which measures the greenback's

strength against a basket of six currencies, held steady at

99.70, firmly within the tight trading channel in which it has

sat for the past three sessions.

The yield on the U.S. 10-year Treasury bond was up 0.4 basis

point at 4.471%. Gold moved 0.4% higher to $4,321.22 an

ounce.

In early European trades, pan-region futures were

down 0.1%, German DAX futures were off 0.2% and FTSE

futures edged 0.1% lower.

In cryptocurrency markets, bitcoin was down 0.8% at

$65,938.29, while ether slumped 2.1% to $1,777.02.