TOKYO - ASIAN shares rose on Wednesday, helped by gains on Wall Street and a jump in banking and technology stocks, with Japan reversing losses as Tokyo Electron and other hi-tech stocks climbed.

In Europe, bookmakers expected leading European indexes to rally, with London's FTSE expected to open up as much as 0.8 per cent and Frankfurt's DAX to gain 1.2 percent.

The dollar edged up 0.2 per cent to 89.13 yen as gains in stock markets prompted investors to offload the safe-haven Japanese currency, but the greenback fell versus the euro as players awaited the outcome of a Federal Reserve meeting.

The US central bank has already cut interest rates to nearly zero and is searching for other tools to pull the world's largest economy out of a deepening year-long recession.

The Fed could unveil fresh steps to ease the global credit crunch when it concludes the two-day meeting later in the day.

IN particular, traders will be scouring its statement for clues on whether it will buy U.S. government bonds, which could help check longer-term borrowing rates.

US Treasuries rose, buoyed by hopes the Fed would move a step closer to buying long-dated bonds.

Benchmark 10-year US Treasuries climbed 9/32 in price to yield 2.555 per cent , down around 3 basis points from Tuesday. The 30-year bond rose 24/32 in price to yield 3.259 per cent , down 3.5 basis points.

Worries about oversupply due to huge bond issuance by governments to fund economic stimulus packages have dented investor sentiment somewhat, but economic concerns on the back of global financial turmoil have underpinned demand for Treasuries.

'If the Fed makes comments on purchasing Treasuries, it would soothe concerns that overseas investors may start picking up fewer U.S. bonds,' said Hideki Hayashi, chief economist at Shinko Securities.

Stocks move up
Traders said US stock futures SPc1 rose after a key US Senate panel expanded a stimulus package aimed at jump-starting the economy to about US$887 billion on Tuesday from its original US$825 billion price tag.

That also helped push Japan's Nikkei average to close up 0.6 per cent, although market players remained cautious.

'The US government is expected to come up with a series of economic steps from now on and that could lead to a financial deficit and the dollar will likely be sold, with the yen as a likely safety bid,' said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

Banks rose after encouraging earnings news from American Express , though Nomura Holdings , Japan's largest brokerage, fell 2 per cent after posting a record US$3.8 billion yen quarterly loss due in part to the cost of integrating Lehman Brothers' operations.

The MSCI index of Asia-Pacific stocks outside Japan climbed 2 per cent following gains on Wall Street, which rallied for the third day in a row on Tuesday on hopes that government efforts to stabilise the US economy will take hold.

The Dow Jones industrial average rose 0.72 per cent while the Standard & Poor's 500 Index gained 1.09 per cent and the Nasdaq Composite Index rose 1.04 per cent, shrugging off a fall in consumer confidence to a record low.

Many investors remain wary of commiting their cash after heavy losses last year and a flurry of bleak economic news and profit warnings from companies around the world.

Canon Inc shares closed 0.4 per cent up ahead of news its quarterly operating profit fell 81 per cent as a deepening recession hit demand for cameras and office equipment .

Shares in Seoul climbed after Lunar New Year holidays, led by chip makers after German rival Qimonda filed for insolvency.

The Korea Composite Stock Price Index rose 6 percent, helped by Samsung Elec and Hynix , which rose nearly 15 per cent on expectations that Qimonda's move would help drain a glut of chips on the market.

Australian shares gained 1.5 per cent, shored up by the banks, while top property stock Westfield Group and building materials group Boral Ltd slid on profit warnings.

The euro climbed against the yen while sterling, which hit a record low versus the Japanese currency last week, gained 1 per cent to 127.11 yen .

The euro was up 0.7 per cent at $1.3257 , while gold traded at $893 an ounce, down from $895.90 on Tuesday.

US crude oil futures regained some ground after dropping 9 per cent on Tuesday. NYMEX crude for March delivery was trading up 59 cents at $42.17 a barrel.

TOKYO
Japan's benchmark Nikkei stock index closed up 0.56 per cent on Wednesday, overcoming early losses on hopes that corporate earnings will not be as bad as feared during the recession, dealers said.

The Nikkei rose 45.22 points to 8,106.29, one day after it soared nearly five per cent.

But the Tokyo Stock Exchange's broader Topix index of all first-section shares ended slightly in negative territory, falling 1.16 points or 0.14 per cent to 804.33.

KUALA LUMPUR
Malaysian share prices rose 0.8 per cent on Wednesday, taking the lead from firmer regional markets, dealers said.

The Kuala Lumpur Composite Index rose 6.94 points to close at 879.63. -- AFP, THOMSON REUTERS