* Talk of US policy stimulus whets appetite for risk
* Some caution ahead of Fed's Yellen testimony on policy
* Asia shares trying to rally for fifth session
* China inflation picks up, lessens global deflation danger
* Copper and iron ore in demand, oil steadies after slip
By Wayne Cole
SYDNEY, Feb 14 Asian shares inched to 19-month
highs on Tuesday as the potential for economic stimulus in the
United States underpinned the dollar, bond yields and Wall
Yet caution bled into markets ahead of testimony by the head
of the Federal Reserve, which could highlight the likelihood of
two or more U.S. interest rate hikes this year.
Japanese shares also ran into trouble after Toshiba Corp
delayed an anxiously-awaited earnings release,
including details of a multibillion dollar charge related to
cost overruns at its U.S. nuclear arm.
The Nikkei slipped 0.7 percent as Toshiba shed more
than 8 percent under the weight of sell orders.
MSCI's broadest index of Asia-Pacific shares outside Japan
edged up 0.2 percent, trying for its fifth
straight session of gains.
Helping sentiment was data showing consumer and producer
prices were rising in China, thus reducing the danger of
deflation across the globe.
Stocks in Shanghai were barely changed on the day,
as were E-mini futures for the S&P 500.
Wall Street indexes had hit historic peaks on Monday, with
the benchmark S&P 500's market value topping $20 trillion as
investors bet tax cuts promised by President Donald Trump would
boost the economy.
The Dow rose 0.7 percent, while the S&P 500
gained 0.52 percent and the Nasdaq 0.52 percent. Apple
, a component of all three indexes, rose 0.9 percent to
close at a record high for the first time since 2015.
The dollar index dipped against a basket of
currencies to 101.830, but was still near its strongest since
Jan. 20, while the euro was a shade firmer after three sessions
of losses to stand at $1.0609.
The dollar scored a two-week top on the yen following
reports that Trump did not discuss the currency or its strength
during weekend talks with visiting Japanese Prime Minister
Shinzo Abe. The dollar was last at 113.45 yen.
PARSING FED POLICY
All eyes are now on Fed Chair Janet Yellen's semi-annual
testimony on policy due on Tuesday and Wednesday.
Tom Porcelli, chief U.S. economist at RBC Capital Markets,
believes Yellen will outline the case for at least three rate
rises this year, rather than the two that market pricing is
One thing investors will be watching is how forceful Yellen
is in keeping alive the risk of a hike in March, something the
market has priced as a distant chance <0#FF:>.
Dallas Fed President Robert Kaplan on Monday argued it
should move soon to avoid falling behind the curve, especially
as fiscal policy could drive faster growth and inflation.
"Given the uncertainty of timing on the fiscal agenda and
the relatively modest uptick in inflation thus far this year, we
think it will be difficult for the committee to get enough
members onboard for a hike in March," said Porcelli at RBC.
"But Yellen could certainly move the 'perception' needle on
In commodity markets, metals were on a tear thanks to supply
disruptions and strong Chinese demand.
Copper hit its highest since May 2015 after
shipments from the world's two biggest copper mines were
Iron ore climbed to its since August 2014 amid reports China
plans to cut steel capacity by at least half in 28 cities across
five regions during the winter heating season.
Oil recouped some ground on OPEC-led efforts to cut output,
though rising production elsewhere kept prices to a narrow range
that has contained them so far this year.
U.S. West Texas crude added 12 cents to $53.05 a
barrel, having shed 1.7 percent overnight. Brent futures
rose 15 cents to $55.74 a barrel.
(Editing by Sam Holmes and Kim Coghill)