* MSCI Asia ex-Japan capped, Nikkei eases as yen firms
* European shares set to inch up
* Japan plays down foreign bond buying plan
* BOJ governor appointment eyed
By Chikako Mogi
TOKYO, Feb 19 (Reuters) - Philippine and Australian shares
scaled new heights on Tuesday but other Asian shares were mixed,
with worries about the risk of an inconclusive outcome in
Italy's election and about U.S. budget talks limiting the upside
after strong rallies in early February.
European markets looked set to inch higher, with financial
spreadbetters predicting London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX would open up 0.1
U.S. stock futures rose 0.1 percent to suggest Wall
Street will reopen with a firmer tone after the President's Day
holiday on Monday.
"Markets have become top-heavy after rallying through early
February on signs of economic recovery in the United States and
Europe, and investors now await fresh factors to push prices
higher from here," said Tomomichi Akuta, senior economist at
Mitsubishi UFJ Research and Consulting in Tokyo.
"The broad sentiment is underpinned by a lack of tail risks,
but investors are turning to some potentially worrying elements
such as Italian elections and U.S. budget talks," he said.
The MSCI's broadest index of Asia-Pacific shares outside
Japan edged up 0.1 percent. Earlier in the day
it had touched a 18-1/2-month high. The index has gained 3.5
percent this year.
Shares in the Philippines, where a strong economic
growth has led to rising interest in the country as an
investment destination, hit a record. The Thai index was
also up 0.3 percent after recent data showed robust
fourth-quarter economic numbers.
Australian shares ended 0.4 percent up at a 4-1/2 year high,
continuing a recent rally on better-than-expected corporate
But Hong Kong shares fell 0.2 percent and Shanghai
shares shed 1.1 percent, with real estate and financials
leading the declines on concerns that rising property prices
would lead to fresh restrictions on the sector.
Tokyo's Nikkei stock average ended down 0.3 percent,
after surging on Monday to approach its highest level since
September 2008 of 11,498.42 tapped on Feb. 6.
The concerns about Italy's election this weekend and the
talks in Washington over a package of budget cuts set to kick in
March 1, also helped limit gains in commodities and also weighed
on the euro.
The dollar's strength against a basket of currencies
capped gains in gold, with the spot price up 0.2 percent
at $1,613.01 an ounce.
London copper steadied at $8,122.50 a tonne as
Monday's three-week low drew bargain hunting given prospects for
a slowly improving global economic recovery. Unease over China's
limp return to the market from a week-long break held back
upside momentum, however.
"I think we've already had the nicest rally that we're going
to get this year," Singapore-based Credit Suisse analyst Ivan
Szpakowski said. "You can still get some more mild upturns, but
frankly as you move to the second half of the year industrial
metals are going to trend down.
U.S. crude fell 0.5 percent to $95.43 a barrel while
Brent steadied around $117.37.
The euro was steady around $1.3348.
Bank of Japan minutes revealed board members had discussed
buying longer-dated government debt at their January meeting,
sending the yield on five-year Japanese government bonds to
The yen firmed, however, after Finance Minister Taro Aso
told reporters Japan has no plans to buy foreign currency bonds
as part of monetary easing and as attention remained focused on
who will be the next Bank of Japan governor.
The dollar fell 0.3 percent to 93.61 yen, but
remained near its highest since May 2010 of 94.465 hit on Feb.
11. The euro eased 0.4 percent to 125.00 yen, below
its peak since April 2010 of 127.71 yen touched on Feb. 6
The yen, which has dropped 20 percent against the dollar
since mid-November, fell further at the start of the week after
financial leaders from the G20 promised not to devalue their
currencies to boost exports and avoided singling out Japan for
any direct criticism.
The choice of the next BOJ governor and two deputies has
drawn attention as a gauge of how strongly Prime Minister Shinzo
Abe is committed to reflating the economy. The G20's message was
that as long as Japan pursues aggressive monetary easing to
achieve that goal, a weaker yen as a result of such domestic
monetary policy will be tolerated, analysts say.
"But that means that some other economy's monetary
conditions have been tightened," said Barclays Capital in a
"Japan hasn't even changed its policy stance thus far, and
the effect of expectations of a looser setting have led to
limited moves in domestic interest rates, but the sell-off of
the JPY has been marked and has clearly caused unease in other
economies," the note said.