The euro and sterling were under pressure on Wednesday after renewed concerns about Europe's fiscal problems but oil, copper and the Australian dollar were supported by China's strong export and import data.
Asian stocks held around six-week highs as foreign funds continued to flow into markets like Japan, South Korea and India, with data showing emerging market equity funds posted a third straight week of inflows.
But Europe was seen mixed after falling for two sessions, reined in by Europe's fiscal worries.
Financial spreadbetters expected Britain's FTSE 100 <.FTSE> to open 6 to 7 points lower, Germany's DAX <.GDAXI> to open down 2 points to up 3 points, and France's CAC-40 <.FCHI> to open down 5 points to up 2 points.
The MSCI index of Asian shares outside Japan <.MIAPJ0000PUS> climbed 0.3 percent after rising as much as 0.4 percent to a fresh six-week high, as renewed hedge fund activity increased volatility in markets around the region.
Powered by foreign investor buying, the benchmark has now rallied more than 11 percent since hitting a five-month low in February on Europe's festering debt problems.
It has recouped its year-to-date losses and is steady compared with the end of 2009.
The fact that foreign investors kept buying was positive as it points to broader appetite for risk as the Greece sovereign debt worries have eased significantly, said Seoul-based Chung Myoung-gi, a market analyst at Samsung Securities.
But whether foreign buying will continue depends on how Chinese economic data, particularly consumer prices, come out this week. Eyes will also be on western Europe, Chung said.
The latest data from funds tracker EPFR shows investment flowed into all emerging market equity funds for the third straight week. Year to date, these funds have net inflows of $2.2 billion.
CHINA BETTER THAN EXPECTED
Chinese data showed imports and exports last month were stronger than expected.
That helped oil prices to reverse their earlier falls and move toward $82 a barrel. The trade figures showed China switched to being a net refined fuel importer last month.
A surprise rise in copper imports also boosted the price of the metal with the three month contract gaining $40 on the day. China is the world's biggest consumer of copper.
The Australian dollar jumped to above $0.915 after the China trade data. China is the biggest buyer of Australia's commodity exports.
But Shanghai's main stock index <.SSEC> fell 0.8 percent, with economists wary of ascribing too many policy implications to the figures because of the timing of the Lunar New Year holiday and a low base of comparison in 2009.
The trend remains positive for risky assets and gains will continue throughout March, said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd in Hong Kong. There is still some life left in the equity market rally.
But he warned that there could be some hesitancy in the second quarter as governments, which had put in place emergency measures and stimulus packages to pull their economies out of recession, start rolling back these moves.
FLAT IN JAPAN
The Nikkei stock average <.N225> was flat, also having hit six-week highs in recent sessions, but recall-hit Toyota Motor Corp <7203.T> fell 1.4 percent after a report that a Prius model had sped out of control in the United States.
Money from overseas has been flowing into the Japanese market since late last year and that's providing solid support, said Hajime Nakajima, deputy general manager at Cosmo Securities.
According to data from Nomura International, foreign investors have pumped in a net $20.6 billion in Japanese stocks.
But given the global macro situation, including credit worries in Europe, it'll take a while until investors actually place Japan above 'neutral' in their portfolios, Nakajima said.
Those worries have hurt the euro and pound in Asian trade.
The common currency came under fresh pressure after Fitch ratings agency said on Tuesday it still had a negative outlook on Portugal's credit rating.
That fed concerns that peripheral euro zone economies may face debt problems similar to those of Greece, where a fiscal crisis has led investors to flee the euro in past weeks.
The euro fell to a low of $1.3588, before bouncing marginally to trade just below $1.36.
The pound was struggling below $1.5000, having been hit by weak data, fears around its sovereign rating and apprehensions about the credit ratings of its banks.
Sterling has lost more than 7 percent this year on concerns Britain will be stuck with a political deadlock after the election expected in May.
(Additional reporting by Jungyoun Park in SEOUL and Aiko Hayashi in TOKYO; Editing by Chris Allbritton)