* Asia shares up 0.4 pct on upbeat earnings, Shanghai outperforms
* Credit markets gain with stocks, spreads at post-Lehman low
* Dollar index stuck near 7-wk low, underpins commodities
By Eric Burroughs
HONG KONG, July 22 (Reuters) - Asian shares inched up to a 10-month peak on Wednesday, but gains were kept in check as investors booked profits in the belief that the run in stocks had become overstretched.
The dollar was stuck near a seven-week low and government bond yields edged higher as portfolio managers kept shifting funds away from safe-haven assets, taking heart from the slew of upbeat corporate earnings showing economic recovery spreading to bottom lines.
Federal Reserve Chairman Ben Bernanke also reassured investors that the central bank was not about to tighten its ultra-loose monetary policy anytime soon in the first of his two days of Congressional testimony.
"We have had a pretty good run-up, and any attempts to rally further would be met by profit taking," said Ben Potter, a research analyst at IG Markets Ltd in Sydney.
Invetsors have tended to look past some of the negatives from the earnings season, such as declining revenue at a variety of companies, to focus on the better-than-expected profits and upbeat outlooks.
Apple was the latest to post surprisingly good profits on strong sales of Mac computers and iPhones, giving its stock a lift in after-hours trade that could help the Nasdaq extend its longest winning streak in 12 years.
The MSCI index of Asia-Pacific shares outside Japan edged up 0.3 percent and reached its highest level since late September.
QUICK OR GRADUAL RECOVERY?
The Shanghai Composite performed better than other Asian indexes with a gain of 1.8 percent.
Companies tied to renewable energy such as Linuo Solar jumped by the 10 percent daily limit after Beijing announced long-awaited subsidies for utility-scale solar power projects on Tuesday.
Japan's Nikkei gained nearly 1 percent, with shares of semiconductor wafers rising on a report of higher prices.
"At this point, I think most people are expecting an economic recovery. The issue now is just whether they think it will happen quickly or gradually," said Tomomi Yamashita, a fund manager at Shinkin Asset Management in Tokyo.
The boost to risky assets has made investors more comfortable holding the corporate debt, driving spreads on benchmark credit indexes to their lowest levels since the collapse of Lehman Brothers last September.
Asia's benchmark iTraxx index of high-grade corporate credit was quoted at a mid-point of 148 basis points by interdealer broker GFI, its tightest level since August and well off this year's peak near 465 basis points reached in March.
In currencies, the dollar index was little changed at 78.906 after extending its slide the previous day to a seven-week low of 78.591. The euro dipped 0.2 percent to $1.4195 but held near a one-month high struck on Tuesday.
The dollar woes have underpinned the rebound in gold and commodity prices. Gold edged up $1.30 an ounce to $949.45, just below a five-week high struck last week. U.S. crude oil dipped 40 cents a barrel to $65.21. (Additional reporting by Elaine Lies in TOKYO and Sonali Paul in SYDNEY; Editing by Jan Dahinten)