Asian shares steady, retail sales underpin dollar

Better-than-expected US retail sales suggest steady recovery in the world's largest economy

Asian shares paused from selling on Tuesday while the dollar was underpinned by better-than-expected US retail sales suggesting a steady recovery in the world's largest economy.

US stocks paused overnight from last week's record high closings and European shares edged off five-year highs after renewed concerns banks sparked profit-taking in the second best-performing sector of the past month.

US retail sales unexpectedly rose in April, prompting Goldman Sachs and JPMorgan to upgrade their view on second-quarter growth and drove the benchmark 10-year Treasury yield up to a six-week high of 1.925% on Monday.

An optimistic outlook for the US economy stirred market talk that the US Federal Reserve could scale back its aggressive bond-buying programme aimed at supporting growth, which has helped drive prices of risk assets higher.

The dollar index last traded down 0.11% at 83.185, not far from this year's high of 83.494 touched last month.

"US retail sales started Q2 on a strong note, alleviating some concerns from the market and the Fed that tax increases may weigh on consumption. The US's economic outperformance relative to the rest of the world and shifting market expectations for quantitative easing will provide broad support to the USD," Barclays Capital said in a research.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed, with Australian shares inching down 0.1% and South Korean shares opening 0.3% higher. On Monday, commodities were pressured lower on the strength of the dollar, which put equities on the defensive.

"The share market will probably trade within a tight range ... the market simply lacks compelling positive catalysts," said Kim Soon-young, a market analyst at IBK Securities, of Seoul shares.

The Nikkei stock average opened up 0.3%, after rising as much as 1.7% on Monday to scale a fresh peak since January 2008 of 14,849.01.

Japanese equities have been bolstered by the weak yen trend, which accelerated after the Bank of Japan's April 4 launch of a sweeping monetary expansion campaign aimed at breaking a 15-year deflationary cycle and putting the economy on a sustainable growth path.

"The market is seesawing between worries about the steep rises and hopes for the government's growth strategy," said Yoshiyuki Kondo, an analyst at Daiwa Securities. "It seems like a good timing to see a pause in the market."

The dollar was down 0.1% against the yen at 101.66, after reaching a 4-1/2-year high of 102.15 yen on Monday. The euro also eased 0.1% against the yen at 131.96 after touching its highest since January 2010 on Monday.

Commodities have been weighed down by the dollar's rise, and capped the Australian dollar, which traded around $0.9964, not far from an 11-month low of $0.9940 hit on Monday.

US crude futures were steady around $95.20 a barrel.