European stocks <.FTEU3> were set to gain for a fourth straight session on strength in Asian and U.S. markets, with investors awaiting the European Commission's assessment of Greece's deficit cutting plan and the U.S. ADP employment report later in the day.
U.S. stock futures also pointed to a slightly firmer open after Wall Street posted two days of strong gains on encouraging economic data, which have helped dispel fears in recent weeks that America's economic recovery may be running out of steam. <.N>
Rising sales of previously owned U.S. homes and robust earnings from U.S. bellwethers in the consumer and industrial sectors pointed to a steady rebound in demand, fuelling gains of as much as 1.3 percent in key U.S. stock indexes overnight.
But some analysts cautioned against predicting a strong run in Asian stocks despite the appearance of more appetite for risk.
While companies overall had been beating earnings estimates, not a lot of upgrades had been forthcoming, said Andrew Orchard, strategist at Royal Bank of Scotland in Hong Kong.
We see it as a year of volatility, a year of consolidation with maybe single digit returns between the positive and the negative, said Orchard.
Of course between the months you could see a few weeks of rallies, a few weeks of sustained falls, but overall we think it won't be too different from where we began the year.
Other analysts have echoed that view, noting that the global recovery and thus corporate earnings could be choppy.
Japan's Nikkei stock average <.N225> edged up 0.3 percent, with rises by exporters on the strong U.S. data offsetting declines for Toyota Motor Corp <7203.T>, whose U.S. sales slid 16 percent after its massive vehicle recall.
Fears of an extended sales slump pushed Toyota down 5.7 percent. Toyota has now lost nearly 20 percent of its market value since its recall was announced on January 21.
All eyes will be on the automaker when it announces third-quarter results on Thursday and how the recall will affect its 2010 earnings forecasts.
Asia Pacific stocks outside Japan as measured by MSCI <.MIAPJ0000PUS> rose 1.9 percent, climbing further away from 3-month lows. The index is down about 4 percent so far this year, after a 68 percent surge in 2009.
MSCI's Asia ex-Japan resources and energy indexes both rose 2.5 percent on the back of firmer commodity prices, and were the biggest contributors to the broader rise in Asian shares.
Shanghai copper rose 2 percent on Wednesday and London metal extended gains as the latest batch of U.S. data helped soothe jangled investor nerves.
Top Australian miners had been sold down over the past few weeks on worries about moves by China, their biggest customer, to rein in bank lending. But signs of a sustainable global recovery have lured investors back into resources stocks.
At the end of the day demand for commodities will remain reasonably robust. I don't see anything that's happened to derail that theory, said David Spry, research manager at broker FW Holst.
Global miner BHP Billiton rose 2.6 percent, helping lift the broader Australian market <.AXJO> by 0.9 percent.
The U.S. dollar steadied after slipping from six-month highs against a basket of currencies <.DXY> as investors moved back into higher-yielding, growth-linked currencies as global markets settled down.
The dollar index <.DXY> hovered around the 79 mark, after retreating from a six-month high of 79.547 struck on January 31.
The Australian dollar was at $0.8848, bouncing from a low of $0.8780 on Tuesday and recovering some of the losses suffered when the Reserve Bank of Australia left its benchmark rate unchanged at 3.75 percent, defying expectations of a rate hike.
The euro held on to gains made on Tuesday, trading around $1.3953 in Asia, as investors awaiting the EC's verdict on Athens' plan to cut its burgeoning deficit.
The EC is widely expected to endorse the proposal, but its assessment will be closely watched by financial markets as they weigh Greece's credibility as a debtor.
Greece's fiscal problems have fueled selling in the euro this year, with concerns that other countries in the bloc also face problems.
U.S. crude oil futures were little changed at around $77.19 a barrel after an industry report showed a bigger than expected build in U.S. crude oil stockpiles last week.
Gold prices were steady at around $1,114.65 per ounce after hitting their highest level in almost two weeks the previous day, with investors cautiously awaiting U.S. jobs data later this week to gauge prospects for the U.S. economy and the dollar.
The U.S. ADP employment report due later on Wednesday could give some clues to the closely watched non-farm payrolls report on Friday. Policymakers fear consumer demand will not rebound decisively until unemployment figures begin to come down.
(Editing by Kim Coghill)