BEIJING (Reuters) – Asian shares fell on Thursday, while the sell-off in U.S. Treasuries paused and oil prices rose, as investors and traders weighed the latest developments in the Ukraine war and more hawkish comments from U.S. Federal Reserve officials.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.6%. Japan’s Nikkei fell by more than 1% on Thursday morning, after touching a two-month high in the previous session.

China’s markets opened lower, with Hong Kong’s Hang Seng Index down 0.9% and the mainland’s bluechip index off 0.7%. Shares of Tencent Holdings dropped 4.6% after it posted its slowest-ever sales rise.

U.S. President Joe Biden arrived in Brussels for a series of summit meetings on the Ukraine War, with Biden set to announce a U.S. package of Russia-related sanctions on political figures and oligarchs on Thursday.

Oil prices held firm. Russia President Vladimir Putin said on Wednesday that Moscow, which calls its actions in Ukraine a “special operation”, will seek payment in roubles for gas sold to “unfriendly” countries.

Brent futures were up about 45 cents, or 0.4%, at $122.05 a barrel and U.S. West Texas Intermediate futures were up about 15 cents, or 0.2%, at $115.07 a barrel. [OR/]

The bond market, meanwhile, paused for breath with the yield on benchmark 10-year Treasury notes last at 2.3098% in Tokyo trading, after retreating from a nearly three-year peak of 2.4170% overnight.

The two-year yield, which is more sensitive to traders’ expectations for the Fed funds rate, stood at 2.1233%, down from an almost three-year high of 2.2020% reached Tuesday.

Federal Reserve policymakers on Wednesday signalled they stand ready to take more aggressive action to bring down unacceptably high inflation, including a possible half-percentage-point interest rate hike at the next policy meeting in May.

Major U.S. equities indexes declined more than 1% on Wednesday. The Dow Jones Industrial Average fell 448.96 points, or 1.3%, to 34,358.5; the S&P 500 slid 55.41 points, or 1.2%, to 4,456.2; and the Nasdaq Composite dropped 186.21 points, or 1.3%, to 13,922.60.

“Equities reversed part of their recent rally as bond yields declined, in a move that might be just a simple pull-back after a ripping rally over the past 10 days,” said Kyle Rodda, market analyst at IG.

“It is still though a relatively volatile market, (which) suggests that these ripping moves in stocks ought to be treated with caution.”

Currency markets steadied on Thursday with the Japanese yen nursing heavy losses. It had hit a six-year low of 121.41 on Wednesday as rising U.S. yields and a deteriorating trade balance sucked cash out of Japan.

The euro hovered at $1.0988 and the Australian dollar took a breather after several days of large gains. The Aussie was little changed at $0.74955, sticking close to an almost five-month high of $0.75070 touched on Wednesday.

Gold was slightly lower, trading at $1942.9 per ounce. [GOL/]

(Editing by Kenneth Maxwell)