Asian shares rose on Wednesday, led by electronics makers and resource stocks, after successful European debt auctions boosted hopes for global growth and lifted commodity prices.
Financial bookmakers were expecting European shares to rise for a sixth session in a row, with spreadbetters calling London's FTSE 100 <.FTSE>, Germany's DAX <.GDAXI> and France's CAC-40 <.FCHI> to open 0.5-0.9 percent higher.
The euro steadied near its highest in 2 weeks, and easing fears about Europe's debt crisis also fueled gains for higher-yielding currencies such as the Australian dollar.
Industrial raw materials also gained, with copper up for a seventh day running to post its longest winning streak since at least 1993, while crude oil extended its rally into a third day.
Oil is basically moving with stock markets and the stock markets are moving with optimism and pessimism over the euro, said Keichi Sano, general manager of research at SCM Securities in Tokyo.
Tokyo's Nikkei <.N225> rose 1.8 percent to close above 10,000 points for the first time in nearly a month, picking up steam after finishing above its 25-day moving average on Tuesday. <.T>
The speculative sell-off in response to negative news, which we had seen up until now, might have come to a halt, and short-covering is now picking up momentum, said Masaru Hamasaki, a senior strategist at Toyota Asset Management.
Electronics makers were the biggest contributors, with Canon <7751.T> up 3.9 percent and Kyocera <6971.T> up 2.5 percent. The Philadelphia semiconductor index <.SOXX> had jumped 5.5 percent on Tuesday after Taiwan's big contract chip makers forecast growing demand.
MSCI's index of Asian stocks outside Japan rose 1 percent.
U.S. stocks gained more than 2 percent on Tuesday, with the S&P 500 rising above its 200-day moving average for the first time in a month, as investors took heart from successful debt auctions in some of the euro zone's weaker members. <.N>
From a technical perspective, the U.S. market retested its 200-day moving average and managed to go through it, so the next few days will be very interesting, said Matt Riordan, portfolio manager at Paradice Investment Management in Sydney.
I think it will remain volatile.
The euro paused around $1.2315, having risen to as high as $1.2350, the strongest level since June 1, in the previous session after debt auctions in Spain, Ireland and Belgium drew solid demand.
The single currency has been battered for months as investors took fright at high euro zone sovereign debt levels and low growth prospects in several countries in the bloc.
Some traders said a short squeeze on the euro -- with investors who had been betting on falls scrambling to cover their positions -- could push the currency higher.
Short-covering and European banks' repatriation will keep the euro buoyant for at least another week, said a currency trader at a Japanese brokerage, adding that the euro remained basically in a downtrend.
The bond auctions also helped the Australian and New Zealand dollars, higher-yielding currencies that tend to gain on heightened risk appetite.
Markets are focusing more on equity markets, so equity-sensitive currencies like the Aussie, Kiwi, Canadian dollar and Swedish crown could be the main focus, said Masafumi Yamamoto, chief FX strategist at Barclays in Japan.
Japanese government bonds dipped as stock market gains dampened demand for safe-haven government debt, but losses were limited as traders cautioned the European crisis still had some months to run.
The significant rise in stock prices has been taken in stride as it is difficult for investors to become optimistic while worries over the euro zone's debt situation continue to simmer, said Makoto Noji, a senior market analyst at Mizuho Securities.
September 10-year JGB futures fell 0.07 point to 140.35, pulling back from a two-year high above 141.00 struck the previous week.
U.S. Treasuries were steady in Asia, having fallen on Tuesday, with few players convinced the sharp bond rally of the past two months, which saw the benchmark 10-year yield fall to 1-year low of 3.06 percent, has run its course.
The biggest reason people do not expect Treasury yields to jump is that the market continues to believe the Federal Reserve won't hike rates for some time, said a portfolio manager at an investment management firm.
U.S. crude futures edged up to near $77 a barrel, a day after spiking more than 2 percent on growing investor confidence in a global economic recovery.
Hopes of improving demand for resources also boosted copper for a seventh straight day, with London prices rising more than 2 percent.
That, in turn, lifted shares in the resources sector, while Australian mining heavyweights Rio Tinto and BHP Billiton , both of which rose more than 2 percent, were also helped by signs the Canberra government was planning revisions to its proposed mining tax.