SYDNEY, July 16 (Reuters) - Asian shares fell on Tuesday

as investors pondered the prospect of a Trump victory and what

that would mean for China, while the dollar climbed for a second

day even though dovish Fed comments fuelled bets of more U.S.

rate cuts this year.

MSCI's broadest index of Asia-Pacific shares outside Japan

fell 0.5%, having eased 0.3% on Monday. Japan

returned from a public holiday, with the Nikkei index up

0.4%.

Overnight, investors continued to digest the fallout from

the attempted assassination on Saturday of former U.S. President

Donald Trump, who is favourite to win the White House in

November and who on Monday nominated his vice presidential

running mate J.D. Vance.

Wall Street closed higher, with the Dow Jones notching an

all-time closing high thanks to energy and banking shares.

Bitcoin jumped 6%, gold climbed towards a record high and the

yield curve steepened as investors favoured so called

Trump-victory trades.

"J.D. Vance sits in the camp of taking China on

head-first in a bid for improved trade deals for the U.S., and

this will only weigh on sentiment towards China, where we saw

better selling in China equity yesterday," said Chris Weston,

head of research at Pepperstone.

The Shanghai Composite index fell 0.3%, while

Hong Kong's Hang Seng index lost 1.4%, having already

dropped 1.5% the day before soft economic data from China

heightened the risk that Beijing could miss its 5% growth target

this year, barring forceful stimulus.

Also cheering Wall Street, Fed Chair Jerome Powell said on

Monday the three U.S. inflation readings over the second quarter

do "add somewhat to confidence" that inflation is returning to

the Fed's target in a sustainable fashion.

Markets have now fully priced in a quarter-point rate cut

from the Fed in September, with a total easing of 68 basis

points expected by the end of the year.

That kept a lid on the U.S. dollar overnight, although it

has attracted buying interest as some investors bet on a Trump

victory. The dollar index firmed 0.1% on Tuesday against

a basket of major currencies to 104.34.

It rose 0.3% on the Japanese yen to 158.55 per dollar

, which is struggling to hold onto the gains after

Tokyo's suspected intervention in the market last week.

"I actually have bought dollars here. I think the U.S.

dollar has probably bottomed for now," said Tony Sycamore,

analyst at IG. "We've had the reaction out of the soft CPI data

and the dovish Powell. And I think the risks to the dollar to

the upside here."

"The idea the Trump administration is more likely to get to

the White House and increase tariffs on China, that's not a good

thing at all for Chinese stocks. Put that together with the

higher U.S. dollar and higher yields, I think it's going to be a

tough time for Hang Seng."

Long-term Treasuries found their footing in Asia, with the

10-year yield off 1.5 basis points to 4.2138%,

having risen four basis points overnight.

In commodity markets, gold rose 0.2% to $2,426.18 an ounce

, nearing a two-month high.

Oil prices ticked down on worries about a slowing Chinese

economy crimping demand.

Brent futures fell 0.2% to $84.72 a barrel, while

U.S. West Texas Intermediate (WTI) crude also slipped

0.2% to $81.77.