(Updates prices as of 0530 GMT)

By Stella Qiu

SYDNEY, Aug 23 (Reuters) - Asian shares sputtered on

Friday while the dollar rebounded from one-year lows as

investors were cautious ahead of a speech by the world's most

powerful central banker with markets looking for confirmation

U.S. rate cuts would start in September.

The Japanese yen gained 0.4% to 145.63 per dollar

after Bank of Japan Kazuo Ueda flagged an willingness

to raise interest rates if the economy and inflation turn out as

forecast.

The Nikkei sold off but turned 0.4% higher in the

afternoon to hit a fresh three-week high as investors decided

Ueda was not as hawkish as feared. Domestic yields rose 3 basis

points in modest reactions.

Europe is set for a subdued open with EUROSTOXX 50

futures flat and FTSE futures up 0.4%. S&P

futures and Nasdaq futures rose 0.3% and 0.6%

respectively.

Data out early in the day showed Japan's core inflation

accelerated for a third straight month, but a slowdown in

demand-drive price gains suggest no urgency for any immediate

rate hikes.

Krishna Bhimavarapu, APAC economist at State Street Global

Advisors, expects the stronger yen and reintroduction of energy

subsidies to slow inflation in the near-term.

"If the data evolves as we expect, it could mean that the

next BOJ hike may not come until December as fears of rapid

inflation ease to an extent."

Traders see very little chance that the BOJ could hike rates

in October after the recent sell-off, but a move in December is

priced at 70%.

Guided by higher Wall Street futures, MSCI's broadest index

of Asia-Pacific shares outside Japan trimmed

earlier losses to be just down 0.1%. It was headed for a weekly

gain of 1%.

China's blue chips gained 0.3%, although Hong

Kong's Hang Seng fell 0.3% while South Korea

edged up 0.1%.

Overnight, Wall Street fell as sentiment turned cautious

ahead of the Federal Reserve Chair Jerome Powell's speech in

Jackson Hole. Three Fed speakers on Thursday alluded to a rate

cut in September, with them voicing support for a "slow and

methodical" approach.

Taken together with surveys showing the U.S. economy

still growing at a healthy pace, markets slightly pared back the

chance of an outsized half-point cut in September to 24%, from

38% a day earlier. A quarter-point reduction is fully priced in.

Robert Carnell, regional head of research, Asia-Pacific, at

ING, noted there was still scope for Powell's speech to excite

or disappoint markets given the market pricing, but much will

depend on data.

"As any decision that deviates from market pricing will rest

on as yet unknown data, it is hard to see how Powell can commit

to much beyond some easing of some sort in September, and even

then, only barring data accidents," said Carnell.

Treasury yields slipped a little on Friday, having

gained overnight for the first time in five sessions. Ten-year

yields fell 2 basis points to 3.8445% in Asia while

two-year yields also dropped 2 bps to 3.9934%.

Declining yields pressured the dollar to one-year

lows, although it did get some respite from selling pressure

overnight. The euro came off its one-year high to

$1.1126, with major resistance seen at $1.1139.

Commodities looked set to end the week lower.

Brent crude futures were almost flat at $77.28 a

barrel, although they are down more than 3% for the week as

swelling U.S. crude stocks and a weakening demand outlook in

China have raised pessimism.

Gold prices are up 0.4% to $2,494.84 an ounce,

recharging towards its record high of $2,531.6 hit just on

Tuesday.