Asian shares edge lower as Fed rate talk revives

Asian stocks slipped on Tuesday as hawkish comments from U.S. Federal Reserve officials clouded the monetary policy outlook less than a week after Fed Chair Janet Yellen had set out a more cautious path to interest rate increases this year.

The dollar got a mild boost from the suggestion that interest rate hikes could be on the way sooner rather than later.

Atlanta Fed President Dennis Lockhart said the central bank might be in line for a rate hike as soon as April, as policymakers' decision to hold rates steady last week was more about ensuring that recent global financial volatility had settled down.

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San Francisco Fed President John Williams told Market News International he would advocate another hike as early as April, and Richmond Fed President Jeffrey Lacker said U.S. inflation is likely to accelerate in the coming years and move toward the Fed's 2% target.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1%, after all three US stock indexes posted small gains overnight.

Japan's Nikkei stock index added 2.1%, reopening after a public holiday on Monday and getting a tailwind from a weaker yen.

"People who bought the yen and sold stocks last week seem to be unwinding their positions," said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.

The dollar nursed losses last week after the Fed halved its outlook for interest rate increases to two from four by the end of this year and said an uncertain global outlook posed risks to the U.S. economy. The latest round of official Fed remarks allowed the greenback to take back some of that lost ground.

The dollar index, which tracks the U.S. unit against a basket of six major rival currencies, added 0.1% to 95.417.

The dollar rose 0.1% against the yen to 112.11, pulling well away from Thursday's 17-month low of 110.67.

The euro edged down slightly to $1.1237, moving away from last week's one-month peak of $1.1342.

Sterling inched higher but remained pressured by concerns about Prime Minister David Cameron's ability to keep Britain in the European Union after leading 'Out' campaigner Iain Duncan Smith resigned from the cabinet late on Friday.

Sterling was last buying $1.4374, well below Friday's one-month high of $1.4514.

"A bit of internal party bickering doesn't normally impact sterling but this time it has because of the possible implications for Brexit," Jasper Lawler, market analyst at CMC Markets, said in a note.

U.S. crude prices dipped after gaining overnight on data showing a drawdown at the Cushing, Oklahoma delivery hub.

Prices fell about 0.3% to $41.40 a barrel after rising 1.19% in the previous session. Brent fell 0.4% to $41.36 after settling up 0.8% on Monday.

Spot gold was steady at $1,243.30 an ounce after logging three losing sessions.