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* MSCI Asia ex-Japan capped, Nikkei eases as yen firms
* European shares set to inch up
* Japan plays down foreign bond buying plan
* BOJ governor appointment eyed
By Chikako Mogi
TOKYO, Feb 19 (Reuters) - Philippine and Australian shares scaled new heights on Tuesday but other Asian shares were mixed, with worries about the risk of an inconclusive outcome in Italy's election and about U.S. budget talks limiting the upside after strong rallies in early February.
European markets looked set to inch higher, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX would open up 0.1 percent.
U.S. stock futures rose 0.1 percent to suggest Wall Street will reopen with a firmer tone after the President's Day holiday on Monday.
"Markets have become top-heavy after rallying through early February on signs of economic recovery in the United States and Europe, and investors now await fresh factors to push prices higher from here," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.
"The broad sentiment is underpinned by a lack of tail risks, but investors are turning to some potentially worrying elements such as Italian elections and U.S. budget talks," he said.
The MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent. Earlier in the day it had touched a 18-1/2-month high. The index has gained 3.5 percent this year.
Shares in the Philippines, where a strong economic growth has led to rising interest in the country as an investment destination, hit a record. The Thai index was also up 0.3 percent after recent data showed robust fourth-quarter economic numbers.
Australian shares ended 0.4 percent up at a 4-1/2 year high, continuing a recent rally on better-than-expected corporate earnings.
But Hong Kong shares fell 0.2 percent and Shanghai shares shed 1.1 percent, with real estate and financials leading the declines on concerns that rising property prices would lead to fresh restrictions on the sector.
Tokyo's Nikkei stock average ended down 0.3 percent, after surging on Monday to approach its highest level since September 2008 of 11,498.42 tapped on Feb. 6.
The concerns about Italy's election this weekend and the talks in Washington over a package of budget cuts set to kick in March 1, also helped limit gains in commodities and also weighed on the euro.
The dollar's strength against a basket of currencies capped gains in gold, with the spot price up 0.2 percent at $1,613.01 an ounce.
London copper steadied at $8,122.50 a tonne as Monday's three-week low drew bargain hunting given prospects for a slowly improving global economic recovery. Unease over China's limp return to the market from a week-long break held back upside momentum, however.
"I think we've already had the nicest rally that we're going to get this year," Singapore-based Credit Suisse analyst Ivan Szpakowski said. "You can still get some more mild upturns, but frankly as you move to the second half of the year industrial metals are going to trend down.
U.S. crude fell 0.5 percent to $95.43 a barrel while Brent steadied around $117.37.
The euro was steady around $1.3348.
Bank of Japan minutes revealed board members had discussed buying longer-dated government debt at their January meeting, sending the yield on five-year Japanese government bonds to record low.
The yen firmed, however, after Finance Minister Taro Aso told reporters Japan has no plans to buy foreign currency bonds as part of monetary easing and as attention remained focused on who will be the next Bank of Japan governor.
The dollar fell 0.3 percent to 93.61 yen, but remained near its highest since May 2010 of 94.465 hit on Feb. 11. The euro eased 0.4 percent to 125.00 yen, below its peak since April 2010 of 127.71 yen touched on Feb. 6
The yen, which has dropped 20 percent against the dollar since mid-November, fell further at the start of the week after financial leaders from the G20 promised not to devalue their currencies to boost exports and avoided singling out Japan for any direct criticism.
The choice of the next BOJ governor and two deputies has drawn attention as a gauge of how strongly Prime Minister Shinzo Abe is committed to reflating the economy. The G20's message was that as long as Japan pursues aggressive monetary easing to achieve that goal, a weaker yen as a result of such domestic monetary policy will be tolerated, analysts say.
"But that means that some other economy's monetary conditions have been tightened," said Barclays Capital in a note.
"Japan hasn't even changed its policy stance thus far, and the effect of expectations of a looser setting have led to limited moves in domestic interest rates, but the sell-off of the JPY has been marked and has clearly caused unease in other economies," the note said.