MSCI's broadest index of Asia-Pacific shares outside Japan was broadly flat after falling nearly 5 percent since Trump's shock victory at the US presidential elections last week.

The US dollar held near a 14-year high on Tuesday and Treasury yields extended their rise as investors braced for stronger inflation in the United States amid expectations of expansionary fiscal polices under Donald Trump's presidency. The combination of the two have derailed Asian currencies and equities, particularly in South Korea, Taiwan and Indonesia, which have seen big inflows this year, especially after the shock referendum vote by Britain to exit the European Union in June.

MSCI's broadest index of Asia-Pacific shares outside Japan was broadly flat after falling nearly 5 percent since Trump's shock victory at the US presidential elections last week. European markets were expected to open steady. Indian stocks and Australian shares led regional losers with declines of 1.4 and 0.4 percent respectively. Hong Kong stocks rose 0.5 percent, boosted by expectations of strong earnings from index heavyweight Tencent.

"People are already pricing in the Trump presidency and the repercussions on their own economies," said Joseph Roxas, an analyst at Manila-based Eagle Equities. "The (regional) currencies are recovering, so the markets are recovering as well after quite a long down period. We should expect a little rally after such a big drop."

On a trade-weighted basis, the dollar index on Monday vaulted above its January peak to hit 100.22, its highest since early December 2015. On Tuesday, it was steady at 99.922.

Dollar strength and rising US yields have fuelled capital outflows from emerging markets. Foreign investors pulled out 950 billion won ($812.52 million) from Korean stocks and pumped in 397.4 billion won ($339.89 million) into bonds between Nov. 9-14.

Analysts expect more gains for the greenback in the short term, resulting in further headwinds for Asia.

Though emerging market equities have staged a comeback in the third quarter, their performance has sharply diverged since last week, putting developed equities comfortably ahead. "The immediate driving force is the anticipated policy mix in the US," Brown Brothers Harriman analysts said in a note to clients.

They said most economists are "focusing on either the higher US interest rates and a likelihood of a somewhat more aggressive Fed tightening cycle, or the possibility of a dramatically more stimulative fiscal stance. We see the combination (the policy mix) as an exceptionally potent force that will continue to propel the dollar higher." Despite the general air of caution over Asian markets, investors are eyeing some opportunities such as banking stocks in Hong Kong which would benefit from any Trump-led deregulation in the financial sector.

Some investors were also considering the Indian rupee, which is relatively less exposed to any flare-up in global trade protectionism than others. In currency markets, the dollar was trading at 107.88 yen after hitting its highest level in more than five months overnight. The less volatile Chinese yuan plunged to its lowest levels in nearly eight years to 6.8641 after a weak fixing.

The dollar has been on a tear since Trump's shock victory triggered a massive sell-off in Treasuries. The large moves in markets has been stoked by expectation that Trump's promised infrastructure spending and tax cuts will spur higher US growth, pushing up inflation as well as borrowing costs.

Yields on the US 10-year Treasury notes climbed to their highest since January to 2.23 percent on Monday, while 30-year paper reached 3 percent. Just two days of selling last week wiped out more than $1 trillion across global bond markets, the worst rout in nearly 1-1/2 years, according to Bank of America Merrill Lynch. In the oil market, Brent crude rose 1.6 percent to $45.14 a barrel, while US crude climbed 1.87 percent to $44.13 on expectations of falling shale output.