* MSCI Asia-Pacific index up 0.05 pct, Nikkei rises 0.2 pct
* Markets eye ongoing U.S.-China trade negotiations
* Dollar/yen hits near 4-mth high with US yields at 7-yr peak
* Crude dips back from 2014 peak, still poised for big weekly gain
By Shinichi Saoshiro
TOKYO, May 18 (Reuters) - Asian stocks edged up on Friday as investors kept a cautious watch on developments in U.S.-China trade negotiations, while the dollar was perched near a five-month peak against a basket of currencies thanks to the benchmark U.S. Treasury yield topping a seven-year high.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.05 percent higher. The index was headed for a 1 percent loss this week.
Japan's Nikkei rose 0.2 percent, South Korea's KOSPI was up 0.25 percent and Australian stocks edged up 0.05 percent.
Wall Street ended slightly lower on Thursday as investors grappled with U.S.-China trade tensions after U.S. President Donald Trump said that China "has become very spoiled on trade".
But helping ease some of the tension, Beijing has offered President Trump a package of proposed purchases of American goods and other measures aimed at reducing the U.S. trade deficit with China by some $200 billion a year, U.S. officials familiar with the proposal said.
A second round of talks between senior Trump administration officials and their Chinese counterparts started on Thursday, focused on cutting China's U.S. trade surplus and improving intellectual property protections.
"President Trump does not do the actual trade negotiations, which are done by officials from both sides," said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.
"China should be well accustomed to Trump's ways by now. Judging from how the talks are proceeding so far, there is a greater chance of the negotiations ending in some sort of a compromise instead of falling through, and such an outcome would bode well for risk sentiment," he said.
In currencies, the dollar index against a basket of six major currencies was steady at 93.482 after rising to a five-month peak of 93.632 on Thursday.
The index has gained about 1 percent this week, buoyed by a surge in Treasury yields.
The euro was up 0.05 percent at $1.1800, but not far off a five-month trough of $1.1763 brushed on Wednesday. The currency has fallen nearly 1.2 percent this week, largely pressured by concerns about Italian political uncertainty.
The dollar extended an overnight rally and rose to 110.870 yen, its highest since late January. The greenback has gained nearly 1.4 percent against its Japanese peer this week.
In commodities, Brent crude futures stood little changed at $79.42 a barrel after rising to $80.50 on Thursday, their highest since November 2014.
Brent has risen 3 percent this week and headed for the sixth week of gains.
A rapid slide in oil supply from Venezuela, concern that U.S. sanctions will disrupt exports from Iran, and falling global inventories have all combined to push oil prices up nearly 20 percent in 2018.
The 10-year U.S. Treasury note yield stood near a seven-year high of 3.122 percent marked on Thursday.
Inflation concerns, strong U.S. economic indicators and worries over increasing debt supply have pushed Treasury yields higher this week. (Editing by Shri Navaratnam)