* European shares seen edging higher; focus on data
* Mounting tensions in Ukraine keep risk appetite in check
* Yen hits nearly two-week high against dollar
* Yellen soothes some concerns on U.S. economic outlook
By Lisa Twaronite
TOKYO, Feb 28 (Reuters) - Asian stocks edged up in late trading after a volatile session on Friday, as investors weighed unrest in Ukraine against Federal Reserve Chairwoman Janet Yellen expressing confidence in the strength of the U.S. economy.
The fear factor helped the yen rise against the dollar and euro on its traditional safe-haven appeal as tensions mounted in Ukraine, even after Yellen's testimony to a Senate committee helped the S&P 500 close at a record high.
European shares were seen edging higher, with sentiment bolstered by expectations that a further drop in euro zone inflation could prompt the European Central Bank to cut rates.
Financial spreadbetters predicted Britain's FTSE 100 would open 7 to 15 points higher, or as much as 0.2 percent; Germany's DAX to gain 9 to 17 points, or as much as 0.2 percent; and France's CAC 40 to rise 9 to 13 points, or as much as 0.3 percent.
"We can expect to see Europe's markets open in positive territory this morning despite concerns about the ongoing and very fluid situation in Ukraine, and the Crimea in particular," Michael Hewson, chief market analyst at CMC Markets UK, said in a note to clients.
Ukraine's interior minister accused Russian forces on Friday of taking control of two airports in the Crimea region and condemned the action as an armed invasion and occupation.
Figures due at 1000 GMT are likely to show euro zone inflation falling to 0.7 percent in February from 0.8 percent in the previous month, according to a Reuters survey.
MSCI's broadest index of Asia-Pacific shares outside Japan was up slightly in late afternoon trading, on track for a modest weekly gain. Tokyo's Nikkei stock average skidded 0.6 percent, down for both the week and the month, but ending well off its session lows.
The strength of the yen battered exporter shares and cancelled out any lift from data showing Japanese factory output rose in January at the fastest pace in more than two years and core inflation near a five-year high.
Hong Kong shares fell on Friday afternoon, with mainland markets also weaker, as investors cut their exposure in cyclical outperformers ahead of a manufacturing survey and a key China parliamentary meeting next week that will discuss how to implement reforms.
"As usual, expectations are running high for some kind of supportive policy, this time for state-owned enterprise reform, but this is a game we have played before. Not much detail usually gets released," said Jackson Wong, Tanrich Securities' vice-president for equity sales.
China's yuan at one point was poised for its biggest daily loss on record and its largest monthly loss in 20 years, as the central bank stepped up its intervention to weaken the currency ahead of the key government meeting.
China's official manufacturing purchasing managers' index (PMI) for February is due on Saturday, after January showed a dip to an eight-month low.
UKRAINE INCREASINGLY UNSTABLE
Investors focused on the increasingly unstable situation in Ukraine. The United States told Russia to demonstrate in coming days that it was sincere about its promise not to intervene in Ukraine as armed men stormed the regional parliament and others seized the Crimean airport.
The unrest prompted investors to seek the safety of U.S. Treasuries, pushing the benchmark yield to more than three-week lows in Asia. The yield on the 10-year note last stood at 2.647 percent, up from its U.S. close of 2.642 on Thursday.
Yellen said on Thursday the Fed will continue to determine whether severe winter weather was behind recent signs of weakness, and stressed that it would take a "significant change" to the economic outlook to sway the Fed from plans to taper its stimulus.
An unexpected rise in U.S. durable goods orders, excluding transportation, also helped U.S. sentiment.
The dollar's early gains against the yen unravelled, with the U.S. unit shedding about 0.3 percent to 101.82 yen, after dropping as low as 101.55 yen, its lowest since Feb. 17.
"Isolated incidents from Ukraine will continue to move the dollar at least until elections are held there in May," said Masafumi Yamamoto, chief strategist at Praevidentia Strategy in Tokyo.
"Any losses the dollar suffers against the yen will be temporary, however, as bargain hunters will be ready each time, supported by the notion that real military conflict will be unlikely," Yamamoto added.
The euro eased slightly on the day to $1.3715, though it held above the previous session's two-week low of $1.3641.
It also surrendered territory to the yen, losing 0.3 percent to 139.64, moving back in the direction of a more than two-week low of 138.75 yen touched on Thursday.
In commodities trading, gold prices were nearly flat with spot gold trading at $1,330.71, but it was on track for its fourth week of gains and biggest monthly gain since July.
Oil slipped, taking its cues from unrest in the Ukraine, with Brent crude down about 0.2 percent at $108.78 a barrel. U.S. oil was down 0.5 percent at $101.92, but it was still on track for a monthly gain.