Western nations tightened sanctions on Russia as Ukraine's second biggest city, Kharkiv, suffered heavy bombardment on Wednesday, and dozens of countries referred Moscow to be probed for potential war crimes.

"So far, investors appear to be discounting a greater chance of "stagflation-lite", meaning sanctions result in even more inflation in developed markets and a bit less economic growth," said Thomas Mathews, a markets economist at Capital Economics.

MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.4 percent and away from its recent 15-month low. Japan's Nikkei added 1 percent, while the rush to commodities lifted resource-rich Australia 0.9 percent.

After bouncing overnight, S&P 500 stock futures were down a fraction, while Nasdaq futures eased 0.2 percent.

European shares also won a reprieve from selling, though analysts at JPMorgan had a stark warning for clients.

"We believe investors should underweight the euro area in both the currency and the equity space given its vulnerability to any further escalation," they wrote in a note.

"We revised our commodity price forecasts 10-20 percent higher across the board given the unfolding geopolitical crisis," they added. "One silver lining is that the crisis forced a dovish reassessment of the Fed by the market, and we continue to assume a 'moderate' hiking path."

Fed Chair Jerome Powell on Wednesday said rates would likely be raised by only 25 basis points this month, and the war in Ukraine has made the outlook "highly uncertain".

Futures reacted by pricing out any chance of a half-point hike later in March.

However, Powell did warn the Fed might have to hike more aggressively if inflation kept rising. That took some of the safe-haven steam out of Treasuries, and 10-year yields shot back to 1.878 percent from Tuesday's two-month trough of 1.682 percent.

European bonds also surrendered some of their recent hefty gains after data showed euro zone inflation hit a record high of 5.8 percent in January, making it harder for the ECB to keep policy super loose.

Inflation was also on the mind of the Bank of Canada when it kicked of a tightening cycle on Wednesday with a quarter-point rate hike to 0.5 percent.

The move combined with the strength of oil prices to lift the Canadian dollar to a five-week high at $1.2625. Other commodity-linked currencies also benefited, with the Australian dollar at a six-week peak.

The euro remained on the defensive at $1.1112, having carved out a 22-month trough overnight at $1.1056. The dollar edged up 115.53 yen as Japan's trade position is set to worsen given it is a major importer of energy and resources.

All of which saw the US dollar index reach its highest since June 2020 at 97.834. It was last at 97.377.

Gold was holding at $1,929 an ounce and still up 2 percent on the week so far thanks to safe-haven demand.

Oil surged past $110 a barrel on expectations the market will remain short of supply for months to come following sanctions on Moscow and a flood of divestment from Russian oil assets by major companies.

US crude rose another 36 cents to $110.96 a barrel, while Brent had yet to trade having surged 9 percent overnight to $114.54.