SYDNEY, Dec 20 (Reuters) – The yen surged and Asian shares fell sharply on Tuesday after Japan’s central bank unexpectedly tweaked its bond yield controls – a move that will allow long-term interest rates to rise more.While the Bank of Japan kept broad policy settings unchanged it widened the allowable band for long-term yields to 50 basis points either side of that, from 25 basis points previously. That triggered an immediate spike in the yen with the greenback dropping 2.71% after the decision to 133.16 , a four -month low.In turn, the Nikkei benchmark index (.N225) slumped 2.71% after trading in positive territory earlier in the day.MSCI’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 1.6%.The BOJ decision was taken as a signal that the forces which drove the yen to three-decade lows this year may be beginning to turn.”The move came earlier than I had expected but a step towards the normalization process of policy in Japan,” Kerry Craig, JP Morgan Asset Mana gement’s global markets strategist, told Reuters.”The market implications are most prevalent in the forex markets given the divergence between US and Japanese policy settings.”While there is still a wide gap, the hint that the BOJ is moving incrementally away from ultraloose policy should be yen positive in the near term.”Elsewhere in Asia, Australian shares (AXJO) extended earlier losses to be off by 1.54% in afternoon trade. (CSI300) was off 1.62%.In early European futures trading, the pan-region Euro Stoxx 50 futures were down 1.23% at 3,772, German DAX futures were down 1.32% at 13,832 and FTSE futures were down 0.83% at 7,306.5.US stock futures, the S&P 500 e-minis, were down 0.85% at 3,812.8.In Asian trading, the yield on benchmark 10-year Treasury notes rose to 3.6825% compared with its US close of 3.583% on Monday.The two-year yield , which rises with traders’ expectations of higher Fed fund rates, wa s at 4.2848% compared to the US close of 4.262%.China’s reopening to the rest of the world from nearly three years of COVID lockdowns continued to be a major concern for investors.Credit Suisse on Monday upgraded its outlook from neutral to outperform for China’s equities markets in the year ahead.”The whole narrative of China has changed, it’s gone from COVID zero that was putting the economy under pressure and there’s now an intention to move towards a reopening,” Suresh Tantia, Credit Suisse’s senior investment strategist. And as that happens, we will see an recovery in China’s economy and markets.” US crude ticked up 0.41% to $75.5 a barrel. Brent crude rose to $79.87 per barrel. Spot gold was slightly higher at $1,790.83 per ounce. Reporting by Scott Murdoch in Sydney; Editing by Lincoln Feast and Edwina GibbsOur Standards: The Thomson Reuters Trust Principles. Scott MurdochThomson ReutersScott Murdoch has been a journalist for more than two decades working for Thomson Reuters and News Corp in Australia. He has specialized in financial journalism for most of his career and covers equity and debt capital markets across Asia based in Hong Kong.