Asian stocks edged up close to 11-month highs on Thursday on strength in resource-related shares, while the Australian dollar gained after a surprise rise in employment prompted increased bets on higher interest rates.
Major European stock futures rose slightly as more company results came pouring in ahead of euro zone and British central bank meetings.
Sterling was flat ahead of a policy meeting of the Bank of England, at which central bankers will decide whether to boost planned asset purchases to encourage growth.
Developed markets were favored during the Asian session, with Japanese and Australian stocks posting gains of more than 1 percent, while Chinese shares in Shanghai dropped on nervousness monetary authorities will take more steps to curb lending.
Japan's Nikkei share average <.N225> rose 1.3 percent, led by Honda Motor <7267.T> after a report the world's top motorcycle maker will import bikes from Thailand to sell in Japan to cut costs.
Camera maker Nikon Corp <7731.T> saw its shares plunge 10 percent and was the biggest drag on the Nikkei, after it warned of a loss that would be more than double its initial forecast.
Stocks in Shanghai <.SSEC> dropped as much as 3 percent but then cut their losses to 1.6 percent though the index is still up some 83 percent on the year.
China's central bank late on Wednesday repeated that monetary policy will remain growth friendly, sticking with its view that the recovery was not solid, though it said it would use market tools to fine tune policy after unprecedented loan growth in the first six months of the year.
That sparked fears of increasing action by authorities to rein in abundant liquidity.
Nearly every sector is overvalued and the whole market is very much excessively valued, said Qian Qimin, deputy research head at Shenyin & Wanguo Securities in Shanghai.
The market is tired. Investors are tired. Any slight negative news can now turn into the last straw to push down the market, not because the central bank is changing its policy, Qian said.
The MSCI index of Asia-Pacific stocks outside Japan climbed 0.7 percent, thanks to strength in telecommunications and materials stocks.
Technology and consumer-related stocks, which have been leaders throughout the rally, were the only sectors down on the day. That suggested profit taking was on the minds of investors after the index hit 11-month highs on Tuesday.
In the United States, network equipment maker Cisco Systems Inc
If we continue to see these positive trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in Q4, Chambers said.
While this is a very important trend, I would want to see the sequential trends continue for several more quarters before we'd be comfortable with saying that we are returning to normal business momentum, he told analysts on a call.
In currency markets, the Australian dollar remained smack within an uptrend, rising 0.5 percent to US$0.8450.
Australian employment increased by 32,200 jobs in July, surpassing forecasts for a 20,000 drop. That fueled expectations that Australia's central bank will be the first among the Group of 10 countries to raise interest rates.
The Australian 1-year overnight indexed swap, basically an instrument to speculate on where interest rates are headed, rose 11 basis points. Dealers priced in 71 basis points worth of tightening over the next 12 months.
U.S. oil for September delivery slipped 0.3 percent to $71.77 a barrel as fears lingered about the face of the U.S. recovery following weak services-sector data. Still, $72 remains an enticing obstacle for traders after the contract closed at $71.97 overnight.
A gauge released on Wednesday of the U.S. services sector, the biggest part of the economy, surprisingly reflected weakness in July, contrasting with upbeat manufacturing and investment readings.
(Additional reporting by Lu Jianxin in Shanghai; Editing by Neil Fullick)