Asian shares up on Yellen comments

By Hideyuki Sano

TOKYO (Reuters) - Asian shares got a lift on Thursday from dovish comments by the U.S. Federal Reserve chief and upbeat Chinese trade data that suggested some signs of stabilisation in the world's second-largest economy.

Risk assets were also underpinned by signs of easing tensions in Ukraine after Russian President Vladimir Putin called on pro-Moscow separatists to postpone a secession vote.

Tokyo's Nikkei share average rose 1.1 percent while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, inching away from five-week lows hit on Wednesday.

Chinese exports rose 0.9 percent in April from a year earlier, beating expectations of a 1.7 percent decline, while imports also overshot economists' estimates.

The data supported the case that Beijing's use of targeted policy measures to underpin growth may be starting to stabilise the economy.

The early impetus for markets also came from Fed Chair Janet Yellen's testimony to Congress, which helped U.S. shares reverse earlier losses to end in positive territory.

Yellen repeated her stance that the economy was still in need of lots of support given the "considerable slack" in the labour market.

"Yellen ... put her emphasis on the ways in which the economy and labour market were still falling short of the FOMC's goals. She also emphasized risks to the economy from a potential continuation of the recent 'flattening out' of housing activity," said Barclays analysts in notes to clients.

"The clear implication is that accommodative policy will be needed for a long time."

The Dow Jones industrial average rose 0.7 percent and the S&P 500 gained 0.6 percent.

Emerging market shares also held firm, with Brazilian shares hitting six-month highs and Mexican stocks at their highest in more than three months.

Yellen's remarks also kept the 10-year U.S. Treasuries yield at 2.590 percent, near Monday's three-month low of 2.572 percent.

Adding to the improved mood, Putin called on pro-Moscow separatists in Ukraine to postpone a vote on secession just five days before it was to be held.

In what could be a breakthrough in the worst crisis between East and West since the Cold War, Putin also announced he was pulling Russian troops back from the Ukrainian border.

Dollar-denominated Russian shares hit a five-week high.

The euro traded flat at $1.3913, not far from Tuesday's two-month high of $1.3952, ahead of the European Central Bank's policy meeting later in the day. A majority of investors are expecting no policy change.

A Reuters poll of more than 60 foreign exchange strategists showed on Wednesday that they think the euro needs to reach $1.42 before the ECB takes any action to weaken the currency. Still, the vast majority believe that such action is unlikely to happen.

The British pound held near a five-year high against the dollar on rising expectations the Bank of England could tighten its policy before the Fed, probably early next year.

With risk sentiment improving slightly, the yen stepped back from a three-week high of 101.43 yen to the dollar set on Wednesday, and traded at 101.82 yen.

Gold licked its wounds at $1,290.30 per ounce after dropping 1.4 percent the previous day.

The Australian dollar climbed 0.3 percent to $0.9352 after local data showed that employment had risen more than expected in April.

(Editing by Shri Navaratnam and Chris Gallagher)