Asian shares inched up while the euro clung to overnight gains Friday, but markets largely stayed within range, as investors awaited a weekend meeting of European leaders for signs of progress in resolving the region's debt crisis.

Pressures remained on investors to square out positions given the increasing uncertainty on when the crisis would be resolved, and with possibility of wide swings in prices and declining liquidity on the way.

Gold and copper rebounded from Thursday's sharp falls.

European leaders said they did not expect Sunday's meeting to give an all-cure solution to the euro zone's debt problems, with regional leaders still sharply divided over how to strengthen a euro zone rescue fund.

France and Germany said in a joint statement Thursday that the leaders will discuss in detail a comprehensive solution to the euro zone crisis at the summit on Sunday but no decisions will be adopted before a second meeting to be held by Wednesday at the latest.

Paris and Berlin wanted negotiations to start immediately with the private sector for an agreement on the sustainability of Greece's debt, according to the communique.

Assets across the board are coming under pressure as it becomes clear that European banks, when faced with a stress test, will likely reduce their assets to strengthen their capital, said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.

This has prompted investors to cut their open positions to be neutral -- closing longs when the market is up, and closing shorts when the markets are down. Given a lack of substantial real money in the market, such a move opens the way for sharp swings in prices, he said.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> as well as Japan's Nikkei stock average <.N225> were little changed.

The regional index had risen as much as 0.5 percent, with the materials sector <.MIAPJMT00PUS> -- the previous day's laggard, leading the rise as gold and copper rebounded.

Until the European plan takes shape and investors are reassured, it's difficult for markets to make major moves, and trading should stick to recent ranges, said Hiroichi Nishi, general manager of the equity division at SMBC Nikko Securities.

COPPER, GOLD UP

The most-active U.S. gold futures contract rose more than 1 percent to $1,630.9 an ounce on Friday, following gains in spot prices, as arbitrage buying from the Shanghai market helped prices rebound from a decline of more than 1 percent in the previous session.

Three-month copper on the London Metal Exchange rose on Friday after its largest one-day collapse in four weeks in the previous session, when copper prices tumbled nearly 7 percent on fears of a double-dip recession and growing doubts that Europe will get a handle on its debt crisis.

Gold's recent move is apparently tied to investors cashing in to offset declines in riskier assets, while industrial metals such as copper are closely linked to headline risks from Europe, which is a major market for China, Niimura said.

Oil was mixed, with Brent crude futures down 0.2 percent to $109.51 a barrel while U.S. crude futures rose 0.5 percent to $86.48 a barrel.

The euro inched up 0.1 percent against the dollar but looked set to stay in a tight range with traders wary of taking big positions ahead of the European summit.

Reflecting a lack of investor confidence in the progress to contain the European debt problems, the spread of bonds issued by the European financial stability facility and German government bonds widened further by several basis points on Thursday. The spread has widened by more than 20 basis points this week.

ASIAN CREDIT SUBDUED

With the market overall taking a wait-and-see stance on what kind of a solution the Sunday meeting would bring, activity was subdued in Asian credit markets, although more signs emerged that investors may be increasingly drawn to regional markets.

The spreads on the iTraxx Asia ex-Japan investment grade index, a gauge for whether investor risk appetite is returning, was a couple of basis points higher on Friday, after inching up about 10 basis points over the past week when investor jitters grew as the key euro zone meeting approached.

But the index fell by a sharp 58 points from this month's peak of 268 points hit when investors were dismissing any chance of European leaders making serious efforts on their debt woes.

Reflecting a somewhat improved sentiment since earlier this month, investor appetite remained strong for the Korean National Oil Corp.'s $1 billion, 5-year dollar bond issued earlier this week, with the bond trading at around 290/292 basis points over U.S. Treasuries, tightening further from Thursday.

We are opening a touch weaker as there is confusion whether the upside from the resolution has been fully priced in. The new KNOC continue to trade tighter showing that guys still have money to put to work, said a Hong Kong based trader with an Asian bank.

In the samurai bond market, America Movil has made its debut with a 12 billion yen offer. Samurai bonds are yen-denominated bonds issued in Japan by a foreign borrower.

Non-Japanese issuers have been showing interest in tapping the samurai market, as yields on safe-haven Japanese government bonds have been pinned to historically low levels, helping contain issuance costs relatively at low levels, and Japanese investors are keen to receive premiums, provided the issuers meet their criteria.

U.S. stocks rose on Thursday even as world stocks as measured by MSCI <.MIWD00000PUS> fell 0.9 percent. European shares <.FTEU3> ended down 1.4 percent on Thursday.

Data relieved fears that the U.S. economy might be heading for a recession, after the Philadelphia Federal Reserve Bank said factory activity in the U.S. mid-Atlantic region unexpectedly expanded in October to its highest level in six months.

(Additional reporting by Lisa Twaronite in Tokyo and Umesh Desai in Hong Kong; Editing by Ramya Venugopal)