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Asian shares edged up on Tuesday thanks to a bounce in battered Chinese markets, although investors were cautious after a slide on Wall Street amid diminishing expectations of a near-term Federal Reserve rate cut, which in turn underpinned the dollar.

Oil prices held largely steady as traders took stock of a visit to the Middle East by U.S. Secretary of State Antony Blinken to discuss a ceasefire offer in the region.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, after a 0.7% decline from the previous session.

Chinese stocks, which had initially opened lower on Tuesday, later reversed course, helped by recent signs of support from state-backed investors and as authorities have stepped in to stem heavy losses in the market.

The blue-chip CSI300 Index was last more than 1.5% higher, while Shanghai Composite Index gained 0.3%, after having plumbed a five-year low on Monday. [.SS]

The China Securities Regulatory Commission (CSRC) said on Monday that it would tighten scrutiny of margin financing, malicious short selling and seek to ward off risks involving pledged shares.

"I think China's regulators made four statements yesterday in an attempt to prop up a market that doesn't want to be propped up, which itself is a sign of panic," said Matt Simpson, senior market analyst at City Index.

Hong Kong's Hang Seng Index rose 1.7%.

Elsewhere, Australia's S&P/ASX 200 index stumbled 0.76% ahead of a rate decision by the country's central bank later in the day, while Japan's Nikkei slid 0.72%.

Data on Monday showed the U.S. services sector growth picked up in January as new orders increased and employment rebounded, adding to growing doubts about the slew of Fed rate cuts priced in for this year, which had already been dialled back in the wake of Friday's blockbuster U.S. jobs report.

That kept the dollar propped close to more than a two-month high against the euro and the yen.

The single currency last bought $1.0746, while the yen stood at 148.54 per dollar. [FRX/]

CENTRAL BANK WATCH

The Reserve Bank of Australia's (RBA) policy decision takes centre stage in Asian hours, where expectations are for the central bank to keep rates on hold.

"While it's too early for the RBA to perform a dovish pivot, the RBA will likely replace its tightening bias with more balanced forward guidance," said Tony Sycamore, a market analyst at IG.

Still, Fed expectations remained the main driver of market moves as investors come to terms with the likelihood of U.S. rates staying higher for longer than initially expected.

That kept U.S. Treasury yields elevated, with the two-year yield, which typically reflects near-term interest rate expectations, hovering near Monday's one-month high. It was last at 4.4471%. [US/]

The benchmark 10-year yield steadied at 4.1347%.

"The shift in the market's assessment of when the FOMC will begin the cut to its policy rate seems valid; we had always though that June was the likelier month for a cut in view of the Fed's prudence," said Thierry Wizman, global FX and rates strategist at Macquarie.

Market pricing shows roughly 115 basis points of easing by the Fed this year, down from over 150 bps at the end of last year.

Bets for a March rate cut have also largely been priced out, and investors have lengthened the odds for one in May.

"What does worry us, though, is whether the ongoing strength of the U.S. job market in January means that the U.S. consumer will stay strong, thereby undoing the disinflationary trend, and extending tight monetary policy more indefinitely," said Macquarie's Wizman.

In commodities, oil prices pared some gains from the previous session, with U.S. crude last down four cents to $72.74 a barrel. Brent futures lost three cents to $77.96. [O/R]

Gold rose 0.15% to $2,027.80 an ounce. [GOL/]