TOKYO - Asian shares edged higher in early trade on Tuesday after upbeat US data helped Wall Street bounce from a sharp selloff in recent days.
Investors were cautious, however, as tensions in Ukraine tempered demand for riskier assets.
Ukraine's president threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave and another group of rebels attacked a police headquarters in the region. The flare-up came less than a month after Russia completed its annexation of Ukraine's southern Crimea peninsula.
The MSCI's broadest index of Asia-Pacific shares outside Japan just 0.2 per cent up, edging back towards an 11-month high of 486.70 hit last week.
Australian shares climbed 0.6 per cent and Japan's Nikkei rose 0.8 per cent after skidding to a six-month low on Monday.
On Monday, encouraging retail sales from the world's biggest economy, which had been bogged down by a harsh winter, gave some respite for the Standard & Poor's and Nasdaq indexes, which had just suffered their worst week since June 2012.
Persistent signs of slowing growth in China also added to the recent anxiety in global markets. A recovering US economy should help ease concerns about slack in the global economy.
Investors in the US also took heart from news that Citi's quarterly net profit rose, as a smaller loss on its troubled assets offset lower revenue and profit from its core trading and lending businesses.
In the currency markets, the dollar held steady after the solid US retail sales data. The euro remained under pressure from weekend comments from European Central Bank officials, including ECB President Mario Draghi, who rekindled speculation about more easing in the euro zone.
The dollar stood at 101.88 yen (S$1.25), little changed from late New York trade on Monday, when it pulled away from a three-week trough of 101.32 hit late last week.
The euro was also little changed at US$1.3818 (S$1.73), having been knocked off a three-week peak of US$1.3906 hit last week on the back of the dovish comments from ECB officials. "Jawboning by policymakers and the risk of more stimulus should be enough to put a top in the EUR/USD but unfortunately there are other factors at play that are out of the ECB's control," Kathy Lien, managing director of FX strategy at BK Asset Management, wrote in a note to clients. "With the European Sovereign Debt crisis in the distant memory, capital inflows are returning to Europe, creating demand for euros. At the same time, there is very little upside momentum in US yields even after today's strong retail sales report," Lien said.
US Treasuries yields rose on Monday as stocks gained on the better-than-expected retail sales data, but the 10-year US Treasury note still at 2.65 per cent late on Monday, not far from a six-week low of 2.603 per cent hit in that session.
In commodities, gold was near its three-week high of US$1,330.90 touched on Monday when renewed concerns over hostilities in the Ukraine increased the precious metal's safe-haven appeal.
Spot gold traded at US$1,326.50 an ounce.