TOKYO Asian shares slipped back from a two-week high on Tuesday after the previous session's hefty gains on China's economic reform plans, while the dollar was on the defensive on expectations the Federal Reserve will keep its stimulus a little longer.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.1 percent, giving up some of Monday's 1.4 percent rally driven by sharp jump in Chinese stocks.
China's CSI300 Index .CSI300 surged 3.3 percent on Monday, its biggest one-day rise in two months, to hit a four-week peak.
In Tokyo, Nikkei futures dipped slightly, indicating a modestly softer open, as the yen bounced against the dollar. The benchmark Nikkei paused for breath on Monday after posting its biggest one-week rise in four years last week.
The yen was up 0.1 percent at 99.925 yen to the dollar, adding to a 0.2 percent rise overnight to end a two-day run of losses.
The euro was little changed at $1.3503, not far from a two-week high of $1.3542 reached on Monday.
As the dollar weakened on expectations that the Fed will continue its bond-buying campaign under expected new head Janet Yellen, U.S. Treasuries yields slipped to below 2.70 percent.
Investors remained on guard for any clues as to when the U.S. central bank will start unwinding its $85 billion-a-month stimulus program, although many in the markets now see any move unlikely until March.
A number of Fed speakers offered more insights into the central bank's stimulus on Monday. The latest was Charles Plosser, president of the Philadelphia Fed, who said improved economic and labor market conditions suggest the Fed should set a fixed dollar amount on its current bond-buying program and end the program when that amount is reached.
William Dudley, the president of the Federal Reserve Bank of New York, said he was becoming "more hopeful" about the U.S. economy.
Investors will turn more cautious early next year as they try to front-run when the Fed will start unwinding its stimulus, said Evan Lucas, market strategist at IG in Melbourne.
"The markets will start to front run the Fed like they did in August leading into the September meeting. Come late January I suspect there will be a change of sentiment from fund managers and hedge funds alike as they start to predict the end and that will affect the current run," he wrote in a note.
U.S. stocks were mixed overnight. The Standard & Poor's 500 .SPX ended lower while the Dow Jones industrial average .DJI eked out a slight gain but failed to close above its milestone level of 16,000, as stocks sold off late in the session after cautious comments by activist investor Carl Ichan on the equities market. .N
U.S. S&P 500 E-mini futures were steady in early Asian trade.
Among commodities, U.S. crude prices held steady at just below $93 a barrel, having fallen 0.9 percent overnight to near a 5-1/2 month low of $92.51 touched last Thursday.
Gold was little changed at around $1,274 an ounce, stabilizing after sliding 1.2 percent in the previous session.
(Editing by Richard Pullin)