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SHANGHAI (Reuters) - Asian shares fell to their lowest in more than 14 months, short-term U.S. yields rose to 23-month highs and the dollar strengthened on Thursday after the Federal Reserve's chairman signaled plans to steadily tighten policy.

At the same time, rising investor concerns over political tensions between Russia and Ukraine exacerbated worries over tight energy market supply, keeping oil prices elevated at multi-year highs.

In its latest policy update on Wednesday, the Fed indicated it is likely to raise U.S. interest rates in March, as has been widely expected, and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings.

But in the follow-up press conference, Powell warned that inflation remains above the Fed's long-run goal and supply chain issues may be more persistent than previously thought.

"There was a marked shift in terms of a relatively dovish statement and then a relatively hawkish press conference," said David Chao, global market strategist, Asia Pacific (ex-Japan) at Invesco.

"Powell (is) not committing to the size or the frequency of rate hikes and also the timing of the balance sheet reduction. I think that buys him a bit of wiggle room as to how quickly and with what velocity he wants to normalise monetary policy in the U.S. ... it's very data dependent and so we're certainly watching other economic data that's going to be released especially inflation data, inflation expectations data, which I think could trigger more aggressive monetary policy tightening."

Concerns that the Fed will increasingly prioritise fighting inflation walloped share markets, erasing a Wall Street rally. [.N]

Asian shares also tumbled, with MSCI's broad gauge of regional markets outside Japan down 1.6% in early trade on Thursday at its lowest level since early November 2020.

Hong Kong's Hang Seng index and Australian shares fell 2% and Chinese blue-chips were 0.2% lower.

In Tokyo, the Nikkei fell 1.9%, touching its lowest point since December 2020.

The policy-sensitive U.S. 2-year yield jumped amid expectations of Fed tightening, rising to a top of 1.1780% in morning trade in Asia, a level last reached in February 2020. The benchmark 10-year yield also ticked up from Wednesday's close, rising to 1.8548% from 1.846%.

The dollar rose on the back of higher yields, lifting the U.S. dollar index, which measures the greenback against major peers, to 96.557.

The yen edged slightly higher to 114.57, while the euro weakened to $1.1230.

Adding to global investor concerns, the United States said on Wednesday it had set out a diplomatic path to address sweeping Russian demands in eastern Europe, as Moscow held security talks with Western countries and intensified its military build-up near Ukraine with new drills.

Worries over tensions between Russia and Ukraine had lifted crude prices above $90 per barrel a day earlier, a level last seen in October 2014.

On Thursday, global benchmark Brent crude eased 0.2% but remained just below $90 per barrel at $89.75. U.S. West Texas Intermediate crude was down 0.2% at $87.18 per barrel.

U.S. officials say they are in talks with major energy-producing countries and companies worldwide over a potential diversion of supplies to Europe if Russia invades Ukraine, although the White House said it faces challenges finding alternative sources of energy supplies.

Spot gold slipped 0.1% to $1,816.42 an ounce on the firmer dollar.