27.02.201406:25:07UTC+00Asian shares gets a shaky kickoff as Ukraine frights grow

Asian stocks got off to a nervous start on Thursday as emerging markets were flustered by escalating tensions in Ukraine, sending investors bolting to the safety of the dollar and US Treasuries.

Japanese stocks descended in early trade, with the Nikkei off 0.7% while MSCI's widest index of Asia-Pacific shares outside Japan skidded 0.2%, and the Australian market laid off 0.3%. There wasn't so much going on from Wall Street either, which failed to stretch its latest profits.

Investors pulled funds out of risk assets on woes of a broader hostiles in Ukraine, sending the Russian rouble to a five-year low versus the dollar and all time-lows versus the euro. Russian President Vladimir Putin commanded drills by his armed forces to test combat readiness in western Russia, close to the border with Ukraine, prodding Washington to caution a military intervention would be a grievous mistake.

The Ukrainian hryvnia reached record lows on Wednesday, following Ukraine's central bank said it was surrendering a managed exchange rate policy.

Safe haven US Treasuries gained advantage from dusky mood in markets, with the 10-year US debt yield diving to a three-week low of 2.662%, amid surprising strength in US new home sales figures. The dollar also strengthened widely, with the dollar index touching its highest peal in around two weeks.

The euro traded at $1.3681, after it fell 0.4% to two-week lows on Wednesday. Versus the yen, which also inclines to increase when markets are stressed, the dollar was slightly changed at ¥102.28.

The intensifying tensions in Ukraine come at a shaky time for markets attempting to make sense of vague policy moves by China's central bank, which drove the yuan currency gliding sharply. Dealers postulated the People's Bank of China was keeping a gradual squeeze on the yuan, to insert more two-way volatility into the market and wrong-foot speculators staking it would keep increasing.

While there is no main data releases in Asia today, traders will be watching for signs of steadiness in Chinese shares and the yuan. The tense backdrop renewed pressure on many emerging market currencies and shares, which were bashed earlier this year on worries on slower global growth and trimming of the US Federal Reserve's monetary stimulus.

The Turkish lira sank to three-week lows and the Brazilian real occurred five-week high hit on Monday. Brazil's central bank accrued its benchmark interest rate on Wednesday to 10.75%, previously 10.50%, slowing down the pace of monetary tightening to avoid wounding an economy that is triffling with recession.

The MSCI emerging stock index has been pinched edgy falls suffered late last month but is battling to retain its head above water, after hitting a peak on February 17.