Asia stocks hit 5-week high after cautious Yellen

June 7 (Reuters) - Asian shares hit a five-week high on Tuesday after Federal Reserve Chair Janet Yellen said U.S. interest rate hikes are likely on the way, held back any reference to the timing. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent while Japan's Nikkei average firmed 0.2 percent. The Fed chief said last month's jobs report was "disappointing" and bears watching, though she gave a largely upbeat assessment of the U.S. economic outlook, warning against attaching too much significance to the payrolls data in isolation. In the absence of a timing hint from Yellen some traders took the view that a July rate hike had become less likely. "Even though Yellen didn't explicitly say so, it sounds as if a rate hike in June and July, which she was had talked about, is becoming difficult," said Nobuyasu Atago, chief economist at Okasan Securities. Money market futures reduced bets on a July rate hike further, to around 20 percent, from 30 percent following Yellen's comments. They were pricing in about 60 percent chances of a rate hike by July before Friday's weak payrolls data. On the other hand, they continue to price in one rate hike by the end of year. Still, diminishing prospects of the Fed tightening policy anytime soon underpinned share prices. U.S. S&P 500 Index closed up 0.49 percent to 2,109.41, just about one percentage point below record closing high of 2,130.82. World equity markets were higher, and MSCI's all-country world equity index rose 0.53 percent for a third straight gaining session to a six-week high on Monday. The dollar briefly dipped following Yellen's comments, though it pared much of its losses by early Asian trade. The dollar index hit a four-week low of 93.745 before bouncing back to 94.037. The euro eased to $1.1356 after having scaled a four-week high of $1.3930 while the yen also stepped back to 107.545 per dollar from Monday's five-week high of 106.35. The Australian dollar changed hands at $0.7371, below Monday's four-week peak of $0.7392 ahead of the Reserve Bank of Australia's policy decision at 0430 GMT. The central bank is widely expected to keep rates on hold after a rate cut last month. The British pound hovered above Monday's three-week low but with various polls showing support for "Brexit" almost neck-and-neck with "remain" camp, implied volatilities on pound options are soaring. The pound traded at $1.4459, off its low of $1.4352 touched in early Asian trade on Monday. One-month volatility rose above 22 percent, highest level since early 2009. Concerns about "Brexit" are also spilling over to European debt markets. German Bund yield hit a one-year low, coming within sight of a record low of 0.05 percent, while Italian and Spanish debt yields rose on rise in support for anti-establishment political parties. Elsewhere oil prices held firm on crippling attacks on Nigeria's oil industry and fresh draws in U.S. crude stockpiles. Global crude benchmark Brent futures hit a seven-month high of $50.83 per barrel on Monday before easing a tad to $50.44 in early Tuesday. U.S. West Texas Intermediate (WTI) crude stood little changed in early Asia at $49.63 per barrel, after having gained 2.2 percent on Monday, its largest gain in three weeks. (Reporting by Hideyuki Sano; Editing by Eric Meijer)