RPT-GLOBAL MARKETS-Asian shares slip, wary of buying fatigue

* Asian shares ease but off lows as Shanghai turns positive

* Nikkei drops 1.6 percent as market cautious before election

* Yen climbs on worries that rally has overtaken recovery (Repeats to more subscribers)

By Charlotte Cooper

TOKYO, Aug 27 (Reuters) - Asian shares mostly eased on Thursday and the yen rose after a flat day on Wall Street following encouraging home sales and durable goods data left investors cautious about chasing shares higher.

Shares in Japan fell 1.6 percent after the Nikkei average hit a 10-month closing high the previous day, with exporters losing steam and caution setting in ahead of national elections on Sunday.

The MSCI index of Asia-Pacific shares excluding Japan <.MIAPJ0000PUS> dropped 0.2 percent. It has lost roughly 3 percent since hitting an 11-month high earlier this month amid investor worries that share prices have run too far ahead of economic fundamentals.

U.S. stock futures also slipped 0.2 percent.

"There's a sense of buying fatigue among investors globally and that is leading to profit-taking," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities in Japan.

"The external environment that had helped produce gains in the market has started showing signs of waning. The U.S. market could be entering a correction phase and the direction of Chinese stocks remains uncertain."

Shares in Shanghai's volatile index <.SSEC> opened down after the country's second-biggest listed property developer China Vanke <000002.SZ> unveiled plans for a big share offer and the regulator approved another major listing.

But by 0245 GMT the Shanghai Composite Index was 0.1 percent up on the day.

On Wednesday, orders for long-lasting U.S. manufactured goods registered the biggest advance since July 2007, but orders excluding transportation goods were slightly below expectations. New home sales jumped in July to their fastest pace in 10 months. [ID:nN26259327]

Investors on Wall Street were cautious, with shares bouncing after the favourable data but then fizzling out.

The Dow Jones industrial average <.DJI> gained just 0.04 percent while the Standard & Poor's 500 Index <.SPX> and the Nasdaq Composite Index <.IXIC> ended up just 0.01 percent.

In Tokyo, exporters such as digital camera maker Canon Inc <7751.T> faced selling pressure.

Market watchers said investors have factored in a big win by the opposition Democratic Party at the polls and focus was shifting to what happens after the vote, including who will be the next finance and economy ministers. [nPOLJP]

Shares in Seoul fell 0.6 percent <.KS11>, weighed down by falls in financials such as Shinhan Financial Group <055550.KS>.

Australian stocks began recovering after slipping early on profit-taking and a fall in resource stocks such as Rio Tinto and BHP Billiton as metal prices were weighed down by news the world's top consumer, China, would take steps to curb industrial overcapacity. [ID:nPEK157466]

New capital expenditure in Australia rose 3.3 percent on the quarter in the second quarter, outstripping forecasts and suggesting the economy is growing faster than expected. [ID:nSYD439944]

Australia's benchmark S&P/ASX 200 index <.AXJO> gained 0.1 percent.

STERLING SAGS, DOLLAR DIPS

In currencies, sterling hit a six-week low against the yen as the Japanese unit surged broadly on concerns that China's plan to curb redundant investment could dent Chinese shares.

Currencies have been monitoring Chinese shares closely in the past few weeks as a gauge of how much the Asian giant can help pull the world out of recession but the mood was also wary with investors nervous a rally in riskier assets has run ahead of itself.

The dollar fell 0.4 percent to 93.92 yen and the euro also slipped 0.4 percent to 133.83 yen , although it was unchanged on the day at $1.4250 .

U.S. Treasury futures were steady after cash bond prices rose in the previous session following solid demand at a $39 billion five-year government debt auction.

Gold prices were also stable, with spot gold at $945.35 per ounce, up slightly from New York's notional close of $944.10.

U.S. crude futures eased but held above $71 a barrel, after a sharp fall this week on the back of an unexpected rise in U.S. crude inventories. [O/R] (Editing by Kim Coghill)