SYDNEY, April 17 (Reuters) - Asian shares were mixed on Wednesday as the world's most powerful central banker had a change of heart on U.S. rate cuts this year, pushing Treasury yields to new five-month highs and the dollar towering against other currencies.

The beleaguered yen is plumbing fresh 34-year lows on an almost daily basis. It was last steady at 154.62 per dollar as the risk of government intervention loomed, although so far there has been no action from Tokyo apart from verbal warnings.

The New Zealand dollar gained 0.4% to $0.5902 after first-quarter inflation data showed domestically driven inflation was surprisingly strong. Markets now see just 34 basis points in total easing this year, down from 60 bps a week ago.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%, after plunging more than 4% in the past three sessions. Taiwanese shares outperformed with a gain of 1%, while other markets were lacklustre.

Japan's Nikkei, however, dropped 0.7% to the lowest in two months. China's blue chips fell 0.1%, while Hong Kong's Hang Seng index edged 0.1% higher.

Wall Street stocks ended slightly lower on Tuesday, helped a little by still-robust corporate earnings. Two-year Treasury yields retested 5% overnight and were last at 4.9828%, while 10-years held near a five-month high at 4.6674% on diminishing expectations of Federal Reserve policy easing this year.

Fed Chair Jerome Powell said recent inflation data, with three months of upside surprises, had not given policymakers enough confidence to ease policy soon. He noted the central bank may need to keep rates higher for longer than previously thought.

Markets have already slashed the amount of easing expected this year to fewer than two rate cuts, a sea change from about six cuts predicted at the beginning of the year. The first rate cut is still expected in September, although the market's confidence in that has declined.

"Now Chair Powell has caved. Surprising in fact that we've not had a bigger reaction. But we think that's coming, or at least part of a process that will ultimately see the 10yr back in the 5% area," said Benjamin Schroeder, a senior rates strategist at ING, referring to U.S. Treasuries.

"Given what we have seen so far from the inflation data, the market would be excused had it decided to downsize the discount for a September cut in a more dramatic fashion."

The International Monetary Fund said on Tuesday the global economy is set for another year of slow but steady growth, with U.S. strength pushing world output through headwinds from lingering high inflation, weak demand in China and Europe and spillovers from two regional wars.

Geopolitical tensions in the Middle East are still running high. Israel vowed to respond to Iran's weekend attack despite international calls for restraint, although its war cabinet put off a meeting to decide on its response until Wednesday.

In currencies, the dollar index measuring the greenback against its major peers was buoyant near a 5-1/2-month high at 106.3.

Asian bonds extended the sell-off in Treasuries. The 10-year Australian government bond yield rose 6 basis points to 4.387%, the highest this year.

The global shift in interest rate expectation has seen markets pushing out the chances of any cut from the Reserve Bank of Australia this year. They only see a 50/50 probability of a first cut in December, meaning even one cut is not guaranteed.

In commodities, oil prices slipped on Wednesday as demand concerns outweighed heightened tension in the Middle East. Brent futures fell 0.4% to $89.68 a barrel, while U.S. crude dropped 0.5% to $84.95 a barrel.

Gold prices held at $2,384.29 per ounce, not too far from a record high of $2,431.29.

(Reporting by Stella Qiu; Editing by Jamie Freed)