Asian shares, dollar ride higher on Ukraine relief

By Lisa Twaronite

TOKYO (Reuters) - Asian stocks rose and the dollar held firm in early trade on Wednesday, after remarks from Russian President Vladimir Putin allayed fears of an imminent military conflict in Ukraine.

Putin said Russia reserved the right to use all options to protect compatriots who were living in "terror" in Ukraine, but that force was not needed for now.

Jeffrey Lacker, president of the Richmond Federal Reserve, told reporters late on Tuesday that while there is a potential risk to the U.S. economy from the crisis in Ukraine, it appears quite manageable so far with commodity markets stable.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent. Australian shares added 0.9 percent.

"As long as the situation does not worsen in the Ukraine over the next 24 hours, investors will start to shift their focus to the outlook for the U.S. labour market," Kathy Lien, managing director at BK Asset Management in New York, said in a note to clients.

Economists polled by Reuters expect Friday's U.S. nonfarm payrolls report for February could show a more solid increase of 150,000 jobs last month.

On Wall Street on Tuesday, Putin's remarks helped the S&P 500 attain another record closing high. The yield on benchmark U.S. Treasuries pulled back from one-month lows to trade at 2.701 percent in Asia, up from its U.S. close of 2.690 percent.

The dollar index edged up to 80.150, moving away from Friday's two-month low of 79.688.

The yen, which rallied on its safe-haven appeal this week as tensions mounted in Ukraine, shed those gains.

The dollar was buying 102.23 yen, inching away from a one-month low of 101.20 hit on Monday, while the euro bought 140.41 yen, moving away from a two-week low of 138.75 yen hit on Thursday.

The euro was nearly flat on the day against the greenback at $1.3740, below Friday's high of $1.3825.

The single currency was likely to tread water ahead of Thursday's European Central Bank monetary policy meeting. The ECB could take steps to bolster the region's recovery, as euro zone inflation has been running well below the ECB's target of just under 2 percent.

On the commodities front, U.S. crude pulled back sharply on Tuesday as Ukraine tensions eased and was down 0.1 percent in early Asian trade at $103.25 per barrel.

(Editing by Shri Navaratnam)