By Masayuki Kitano
SINGAPORE, April 10 (Reuters) - Asian shares edged lower on Tuesday as Wall Street retreated from its highs after the FBI raided the offices of U.S. President Donald Trump's long time lawyer, dampening risk appetite already under strain from an escalating U.S.-China trade spat.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.2 percent. South Korea's KOSPI .KS11 fell 0.8 percent, while Japan's Nikkei .N225 shed 0.4 percent.
The sharp pull-back on Wall Street late in Monday's trading seems to be dampening market sentiment, said Hirofumi Suzuki, an economist for Sumitomo Mitsui Banking Corporation in Singapore.
"U.S. equities rapidly lost momentum and so sentiment wasn't that positive in the end," Suzuki said.
News that the Federal Bureau of Investigation had raided the offices and home of Trump's personal lawyer Michael Cohen on Monday had put a dampener on equities, which had rallied on signs of cooling in the China-U.S. trade spat. has been at the centre of a controversy surrounding payment to a porn star who has alleged that she had sex once in 2006 with Trump and was paid money shortly before the 2016 election to keep quiet about it.
On Wall Street on Monday, the S&P 500 stock index .SPX gave up intraday gains as much as 1.9 percent to end up 0.3 percent.
Markets are keenly awaiting a speech by Chinese President Xi Jinping at the Boao Forum on Tuesday, which could elicit Xi's first reaction on the tariff standoff with the United States.
Financial markets have been buffeted over the past week or so amid the tit-for-tat tariff threats between the world's two biggest economies.
On Monday, China stepped up its attacks Washington over billions of dollars worth of threatened tariffs, but Trump again voiced optimism the two sides would hammer out a trade deal. equities managed to rally overnight on hopes the two sides will cool tensions and avert a full-scale trade row, with oil prices up more than 2 percent overnight for their biggest daily percentage gain since March 21.
Brent crude LCOc1 futures rose $1.54 to settle at $68.65 a barrel.
Russian stock indexes and the rouble both fell sharply on Monday after the United States hit Russian companies and officials with new financial sanctions to punish Moscow for a range of activities, including alleged meddling in the 2016 U.S. election. dollar-denominated RTS stock market index .IRTS slid 11.4 percent, its largest single-day drop since December 2014, while the rouble RUB= slid more than 4 percent against the dollar, the biggest loss since January 2015.
DOLLAR ON DEFENSIVE
The U.S. dollar nursed its losses after slipping against a basket of six major currencies on Monday, hampered by persistent worries about the U.S.-China trade conflict.
The dollar index held steady at 89.805 .DXY , after shedding 0.3 percent on Monday.
The euro inched up 0.1 percent to $1.2327 EUR= , clinging to the gains made on Monday when it rose 0.3 percent as comments from European Central Bank President Mario Draghi were seen as supportive for the common currency.
A slide in stock markets this year has not materially impacted euro zone financial conditions, Draghi said on Monday, suggesting that policymakers remain calm about the recent market volatility. MSCI, Nikkei datastream chart
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