European stocks were poised to follow Asian shares higher Wednesday as investors hunted for bargains, while the euro edged up against the dollar as traders covered some bets against it following a sharp overnight fall.

The constellation of asset price action reflected risk-taking among investors, who had been mostly driven for the past few weeks by fears that still lingered about a euro zone break up and global recession.

The Australian dollar rallied 1 percent, climbing above $1.06, U.S. Treasury yields edged higher and gold tumbled on a sudden large sell order in thin trading conditions.

The Swiss franc, which had been along with gold the safe haven of choice for investors, kept to a relatively tight trading range above 1.2000 per euro, the day after the Swiss central bank said it would buy foreign currencies in unlimited quantities to enforce a cap on the currency versus the euro.

The stock market is rebounding after steep declines in recent days, but the situation has not changed and volatility remains high, Korea Investment Trust Management fund manager Kim Young-il in Seoul told Reuters.

Uncertainty is high about the direction of the U.S. economy, and uncertainty is even higher in Europe as investors are not sure whether the bloc is going in the right direction.

Japan's Nikkei share average <.N225> rose 2.0 percent, coming off a two-and-a-half year closing low on Tuesday, and MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> gained 2.3 percent.

The biggest gainers in the MSCI index were the tech and materials sectors, as electronics exporters such as South Korea's Samsung Electronics <005930.KS> and miners like Australia's BHP Billiton posted strong gains.

Shares of electronics makers have taken some of the worst beatings in the global market rout of recent weeks on mounting worries about slowing consumer and corporate demand.

The Nikkei was trading at a price-to-book ratio of 0.95 as of Tuesday's close. That was the lowest since Aug. 24 and before that the lowest since April 1, 2009. A price-to-book ratio below 1.0 for the Nikkei means that the market value of every stock in the index is less than if all the companies' assets were liquidated.

Value-driven investors, though, were not returning in hordes to scoop up bargains.

It's a short-term rebound. I'm rather pessimistic, said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

AUSTERITY DEMANDS

The euro zone's most indebted and high risk nations were scrambling on Wednesday to convince investors and the rest of Europe of their commitment to tackle their debt problems, even as the bloc's main paymaster Germany faced increasing opposition to further aid.

An unexpected jump in a U.S. services sector index, however, helped stocks on Wall Street pare losses into the close and end down less than 1 percent.

S&P 500 futures traded in Asia rose about 0.6 percent on Wednesday.

Investors are now focusing on a speech by U.S. President Barack Obama to Congress on Thursday, which CNN reported would include plans for a $300 billion jobs package.

The euro rose about 0.4 percent to around $1.4060, still not far from a two-month trough plumbed on Tuesday.

The dollar, pressured by disappointment that the Bank of Japan took no action at a policy meeting, was down 0.6 percent at around 77.19 yen, coming off an overnight high of 77.74.

Speculation had risen on Tuesday that Japan may introduce measures to curb currency strength after Switzerland's shock move.

The Swiss franc plunged nearly 10 percent against the euro on Tuesday, its biggest daily fall ever, after the Swiss central bank jolted markets by drawing a line in the sand on how much the currency can gain.

While we would not stand in the way of the SNB move, we question whether the SNB will be fully successful in maintaining 1.20 if global risks accelerate, BNP Paribas strategists wrote in a note.

In commodities markets, spot gold fell further after striking a new record above $1,920 following the Swiss National Bank move. A large sell order caught traders off guard and triggered automatic sell orders, taking the metal to as low as $1,826.18.

Brent crude prices rose on Tuesday after three straight declines as tight North Sea supplies, continuing uncertainty about Libya's oil and more tropical storms boosted prices.

 

Brent crude was up about 0.4 percent to $113.30 a barrel on Wednesday, while U.S. crude gained 0.4 percent to $86.35 a barrel.