Asia stocks edge up as US trade deals in focus

Asian equities edged higher on Wednesday, with risk appetite contained by elevated bond yields as investors remained nervous about the fiscal outlook of major developed economies and the lack of progress on fresh trade deals.

Crude prices rose more than $US1 ($A1.60) a barrel after a CNN report said Israel was preparing a strike on Iranian nuclear facilities, raising supply concerns out of the key Middle East producing region and bringing geopolitical concerns back into focus.

All eyes are also on the Japanese bond markets, a day after yields on super-long tenors surged to record highs on worries about demand for the country's debt after a weak 20-year auction.

In early trading on Wednesday, the yield on 20-year bonds edged up two basis points, while those on the 30-year JGB slipped 1.5 bps.

In stocks, China's blue-chip index was muted in early trading, while Hong Kong's Hang Seng Index rose 0.58 per cent.

China said it could take legal action against any individual or organisation assisting or implementing US measures that advise companies against using advanced semiconductors from China.

The MSCI's broadest index of Asia-Pacific shares outside Japan crept up 0.5 per cent, while Japan's Nikkei was down 0.18 per cent.

"The markets are hungry for new catalysts to pique further risk appetite," said Kyle Rodda, senior financial market analyst at Capital.com.

"The US's backflip on trade policy and the damage control that it went into to clean up the mess it created with the Liberation Day tariffs signals a determination to get all of this done. That's what is keeping equity valuations well supported."

Data on Wednesday showed Japanese shipments to the US fell in April even as exports rose for the seventh straight month, highlighting the toll President Donald Trump's tariffs could take on the fragile economic recovery in Japan.

Fiscal woes were also reflected on Wall Street, with the benchmark S&P 500 snapping a six-day winning streak on Tuesday, limited by a rise in US Treasury yields, which were steady in Asian hours on Wednesday.

A tax bill that could add about $US3 trillion ($A4.7 trillion) to $US5 trillion ($A7.8 trillion) to the US federal government's mushrooming $US36.2 trillion ($A56.4 trillion) debt load is expected to be voted on later this week in Congress, just days after Moody's became the latest agency to lower the country's credit rating.

Analysts also noted that any progress on new trade deals between the US and its trade partners could fuel risk appetite, although concerns were that Trump's policies could have already damaged the global economy.

On Tuesday, US Federal Reserve officials said that higher prices were coming on the back of rising US import tariffs and counselled patience before making any interest rate decisions.

Traders were also wary of US officials angling for a weaker greenback at Group of Seven finance minister meetings currently under way in Canada.

In Europe, STOXX 50's futures were steady while FTSE 100 futures were muted, with caution setting in ahead of a consumer inflation report expected later in the day out of the United Kingdom.

Economists polled by Reuters forecast the consumer price index to rise 3.3 per cent in April from the previous month's 2.2 per cent.

The dollar index, which measures the US currency against six other units, edged down 0.03 per cent to 99.938, following a 1.3 per cent two-day decline. The Japanese yen strengthened to 144.27 per dollar, hovering near its strongest level in two weeks.

Gold prices rose on Wednesday as the dollar weakened and investors flocked to safe-haven assets. Spot gold was 0.14 per cent at $US3,293 ($A5,130) per ounce, the highest in more than a week.