Asia shares tip-toe higher, dollar up on Yellen's remarks

By Shinichi Saoshiro

TOKYO (Reuters) - Most Asian shares edged up on Thursday after Greece approved a bailout plan and brought mild relief, while the dollar stood tall as Federal Reserve Chair Janet Yellen reinforced expectations for a U.S. rate hike.

Spreadbetters expected a higher opening for Britain's FTSE, Germany's DAX and France's CAC after the Greek parliament approved a bailout plan that further lessens the likelihood of Athens exiting the euro zone.

Japan's Nikkei rose 0.7 percent, Australian shares were up 0.6 percent South Korea's Kospi also 0.6 percent.

And as of 0530 GMT, Shanghai stocks were up 0.7 percent and the CSI300 index gained 0.8 percent, clinging to positive territory after sinking earlier in the session.

Underscoring fragile sentiment after a big recent rout, China's mainland indexes had slumped the previous day despite positive gross domestic product data.

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

In her semiannual testimony to the U.S. Congress on Wednesday, Yellen repeated her view that the Fed will likely hike interest rates this year if the U.S. economy expands as expected, and cited improvement in the labour market.

"Yellen's comment gave no major news and did not change the widely perceived view that the Fed will likely raise rates sometime this year," said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.

"If the rates are increased in small increments while U.S. fundamentals are improving, the stock market should take it as a positive thing, and that's what the market is expecting."

The Greek parliament passed a sweeping bundle of austerity measures demanded by European partners, a price to pay for opening talks on a multi-billion euro bailout package near-bankrupt Athens needs to stay in the euro zone.

The euro, already beaten down overnight against the dollar after Yellen, showed limited reaction to the Greek vote outcome which did not surprise many in the market.

The European common currency dipped 0.2 percent to $1.0922. The dollar traded at 123.85 yen and in reach of a near three-week high of 123.97.

"Not only did Yellen confirm that rates will rise this year but it is her view that waiting too long would mean rates would have to rise at a faster pace later," Kathy Lien, managing director of FX Strategy for BK Asset Management, wrote.

"She prefers to start earlier to allow for a more gradual rate path. As a result every FOMC meeting this year including September is a live meeting at which the central bank could raise rates."

It was a different story for Canada, which saw its central bank on Wednesday cut key interest rates for a second time this year amid a flagging economy.

The Canadian dollar was at C$1.2936 to the greenback after touching C$1.2958, its lowest since March 2009.

The New Zealand dollar slumped under a similar predicament after weaker-than-expected inflation data and plunging dairy prices cemented expectations for a rate cut there as early as next week.

The kiwi skidded to $0.6498, a low not seen since July 2009.

In commodities, crude oil rebounded modestly after data showed that U.S. crude inventories dropped and refinery demand was high.

U.S. crude rose 0.7 percent to $51.79 a barrel after dropping 3 percent on Wednesday when expectations that increased exports from Iran will add to a global supply glut. Brent gained 0.4 percent to $57.42 a barrel.

Tuesday's nuclear agreement between six world powers and Iran is expected to result in the lifting of sanctions, which have limited sales of Iranian oil for several years.

(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Simon Cameron-Moore)