By Tom Westbrook and Alun John

SINGAPORE/HONG KONG (Reuters) - Most Asian share markets advanced on Wednesday, following overnight gains on Wall Street, but trading was choppy as investors grappled with high U.S. yields and China's cautious economic policy response to pandemic lockdowns.

In a sign of the strange mood, the Japanese yen gained on the dollar, having fallen nearly every session in the past two weeks and repeatedly setting fresh 20-year lows, while spot gold fell 0.5% to its lowest in a week dragged down by higher yields.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, its first positive session in a week supported by gains in Hong Kong, which added 0.8%, and Australia, which was closing in on a record high, led by a 25% leap in Ramsay Health Care following a takeover bid from private equity giant KKR.

Japan's Nikkei rose 0.9%, like other markets in the region tracking gains Wall Street where the three main benchmarks had their best days in over a month, helped by several strong earnings results. The Nasdaq closed up 2.2%.

This looked to be it for the share rally however, as Nasdaq futures dropped nearly 1% in Asia trade, dragged by a plunge in Netflix (NASDAQ:NFLX) shares after market when the company reported its first fall in subscriptions for a decade.

S&P500 futures fell 0.4% but EUROSTOXX 50 futures rose 0.2%, and FTSE futures gained 0.15%.

China bucked the regional trend with its blue chips shedding 0.83% after the central bank kept its benchmark lending rates unchanged, despite frequent government pledges to support a slowing economy hit by the worst COVID-19 outbreak in two years.

That decision in contrast helped the Chinese yuan recover after hitting its lowest since October in early trade.

"Investors were looking for stimulus from China but the PBOC didn't deliver today," said Carlos Casanova. "Markets inevitably are going to interpret that in a negative way with the lockdowns extending into April and beyond, meaning the worst months for economic data are ahead of us."

But he said the PBOC's decision "was not entirely a surprise because it is concerned that if it eases at this point in time, firstly it will have little effect on the economy given how many people are locked up at home, and secondly it could be detrimental if it leads to a wider rate differential with the U.S. which could push outflows."

The yield on a highly-traded contract of China's 10-year government bond fell below the U.S. 10-year Treasury yield for the first time since 2010 earlier this month, and Chinese 10 year yields were last around 2.85%.

Benchmark 10-year Treasury yields were within a whisker of 3% on Wednesday -- though were little changed on the day, -- and inflation-protected yields were in positive territory for the first time since 2020. [US/]

Yield differentials are also a factor for Japan, where the central bank on Wednesday offered to buy an unlimited amount of 10-year Japanese government bonds (JGB) at 0.25%, in its third move since February to defend its yield target.

Expectations that the Bank of Japan will stick with its ultra-easy policy for some time while the Federal Reserve and others hike rates have sent the yen reeling against the dollar, but the dollar retreated 0.2% on the yen on Wednesday amid some worries that intervention - verbal or otherwise - from Japanese authorities could drive a bounce.

Elsewhere in currency markets, the war in Ukraine has kept the euro pinned and it last bought $1.3025.

Oil prices rebounded on Wednesday from sharp losses in the previous session as concerns about tighter supplies from Russia and Libya dominated.

Brent crude futures rose 0.7% to $108 a barrel.