* Trump pauses planned attack on Iran, says 'good chance'

of Iran nuclear deal

* US futures reverse early gains, European futures edge

higher

* Bond selloff abates as oil prices ease

* Dollar back at 159 yen, traders on alert for

intervention

By Rae Wee

SINGAPORE, May 19 (Reuters) - Asian shares wobbled on

Tuesday while bonds found their footing following a steep

selloff after U.S. President Donald Trump's decision to pause a

planned attack on Iran and his claim there was a good chance of

a nuclear deal sent oil prices lower.

Trump said on Monday he had paused a planned attack against

Iran to allow for negotiations to take place on a deal to end

the war, after Tehran sent a new peace proposal to Washington.

He subsequently said there was a "very good chance" the U.S.

could reach an agreement with Iran to prevent Tehran from

obtaining a nuclear weapon.

Still, investors remained cautious after being rattled in

the previous session by a weekend drone strike in the United

Arab Emirates.

"We've seen a lot of back and forth already," said Fabien

Yip, a market analyst at IG.

"Until we actually see real action happening (in the Strait

of Hormuz), whereby ships are passing through safely and we see

a material rebound in the numbers of traffic going through in

the Strait, I think the market in general is shrugging off the

commentary from either side."

Brent crude futures fell more than 2% to $109.41 a

barrel on the back of Trump's comments, while U.S. crude

was down 1.3% to $107.25 per barrel, though both remained more

than 50% above their pre-war levels.

In share markets, MSCI's broadest index of Asia-Pacific

shares outside Japan was down 0.22%, while

Japan's Nikkei rose 1%. South Korea's Kospi fell

2%.

Nasdaq futures reversed early gains to trade 0.07%

lower, while S&P 500 futures lost 0.03%. In Europe,

EUROSTOXX 50 futures rose 0.4%, while FTSE futures

and DAX futures edged 0.3% and 0.4% higher,

respectively.

The all-important artificial intelligence trade will be

tested by earnings from Nvidia ( NVDA ) that are due on

Wednesday, where expectations are sky-high for the world's most

valuable company.

"Nvidia's ( NVDA ) earnings are the ultimate test for a stock market

that is not only trading at record highs, but one that also had

a breathtaking bounce off of the March lows, as Nvidia ( NVDA ) is the

market's shorthand for everything AI and this market's gains

have been driven in large part by AI over the past few years,"

said Richard Reyle, chief investment officer at Questar Capital

Partners.

BOND SELLOFF ABATES

The fall in oil prices helped stem a steep selloff in global

bonds on Tuesday, though worries remained about the lasting

inflationary shock from the Iran war.

Yields on the benchmark 10-year U.S. Treasury note

eased from a more than one-year high to 4.5974% in

early Asian trade, while the two-year yield was down

slightly to 4.0564%.

Japanese government bond yields, which shot to record highs

in the previous session, were similarly down across the curve.

Overnight, G7 finance ministers acknowledged mounting

concerns over public debt and bond market volatility as they met

in Paris.

Markets are now pricing in rate hikes from major central

banks this year on expectations policymakers will have to

tighten policy to combat a resurgence in inflation driven by

higher-for-longer energy prices.

"While the economic rationale for pricing persistently

higher inflation over the coming years on the current supply

shock is weak particularly given the labor market backdrop, a

return of supply-side volatility and the sanguine growth tone in

markets both argue for more risk premium through the inflation

curve," Goldman Sachs analysts said in a note.

In foreign exchange, the dollar has benefited from

safe-haven demand since the onset of the war and was up 0.1% at

159 yen, putting traders on alert for any intervention

from Tokyo to shore up its ailing currency.

The euro was down 0.1% at $1.1643, while sterling

similarly fell 0.1% to $1.3419.

Elsewhere, spot gold eased marginally to $4,562.50 an

ounce, having come under pressure from rising bond yields.