HONG KONG - Japanese shares led gains in Asian stocks on Tuesday as the Bank of Japan (BOJ) defended its ultra-easy monetary policy stance, while oil slid on fears of lower demand from China as Shanghai shut down to combat a COVID-19 surge.

Japan's Nikkei gained 1.1%, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.67%, also helped by the first direct talks between negotiators in the Russia-Ukraine conflict in more than two weeks, even as fighting raged on.

Futures pointed to a higher open in European markets. EUROSTOXX 50 futures jumped 1.1% and FTSE futures rose 0.6%. U.S. S&P 500 futures were more muted, up 0.17%.

The BOJ vowed to keep monetary policy ultra-loose, offering to buy unlimited amounts of 10-year government bonds to prevent yields in Japan from rising as they are doing elsewhere following U.S. Federal Reserve's moves to hike interest rates in the face of mounting inflationary pressures.

The central bank was finding it tough going, however, as the 10-year JGB yield stood at 0.245% hovering near the BOJ's implicit 0.25% cap.

This also weighed on the yen, which was at 123.54 per dollar even after staging a small recovery from its bruising the day before.

"Excess volatility and disorderly currency moves could hurt economic and financial stability," Japan's top currency diplomat Masato Kanda told reporters on Tuesday, confirming the resolve of Japan and the United States to closely communicate on exchange-rate issues.

Elsewhere trading remained choppy. Investors will favour markets that are lagging the Fed's rate hike, operating on "a day-to-day trading mentality" amid market noise and short-term developments, said Chi Lo, senior market strategist APAC at BNP Paribas Asset Management.

"There is not really even medium-term direction that the market is following," he said.

Meanwhile, oil prices weakened as traders expected China's economy to suffer in the country's fight against renewed outbreaks of COVID-19.

U.S. crude lost 0.7% to $105.17 per barrel and Brent was at $111.65, also down 0.7%.

China's financial hub of Shanghai on Tuesday tightened the first phase of a two-stage COVID-19 lockdown, after it reported a record 4,381 asymptomatic COVID-19 cases and 96 symptomatic cases for March 28 - though the caseload remains modest by global standards.

"Certainly commodity markets will not be comfortable in the short term with China shutting down," Lo said. Many observers estimate less than 5% growth this year for the world's second-biggest economy, he said, a view he rated as "too pessimistic" given expectations for stronger stimulus measures.

Chinese blue chips lost 0.43%, while Hong Kong's Hang Seng index rose 0.76%.

Yields on U.S. benchmark 10 year treasury notes were steady at 2.4716%, little changed on the day due to a pause in the sharp sell-off seen in recent days.

However, two-year yields rose as far as 8.2 basis points to a nearly three-year peak of 2.421%, causing the gap between two- and 10-year yields to narrow to its tightest since early 2020.

Spot gold dropped 0.1% to $1,922.24 an ounce.

(Editing by Simon Cameron-Moore and Kenneth Maxwell)