HONG KONG (REUTERS) - United States and European share futures jumped on Wednesday (Dec 1), oil rose and Asian stocks were heading for their best day in nearly two months as traders reversed course after a sharp sell-off the day before took the regional benchmark to a 12-month low.

Competing for the limelight, US Treasury yields climbed steadily after US Fed chair Jerome Powell signalled the US Federal Bank may speed up the pace of its bond-buying taper at its meeting later this month.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 per cent, which would be its best daily gain since early October, as traders decided Tuesday's declines, which sent the benchmark to its lowest since November last year, had gone too far.

While that helped the regional benchmark walk back this week's sell-off, it is still sitting about 2 per cent below Thursday's close before news of the latest variant of the new coronavirus derailed markets.

Singapore's Straits Times Index was up 1.8 per cent at 2pm local time.

Hong Kong rose 1.1 per cent and South Korea 2.2 per cent to lead Wednesday's gains, although both were recovering from 12-month lows hit the day before.

The share rally in Asia looked set to continue into European and US trading. Nasdaq 100 futures rose 1.35 per cent, S&P500 futures gained 0.78 per cent, Euro Stoxx 50 futures advanced 0.63 per cent and FTSE futures rose 0.67 per cent.

"As the market really oversold and over-digested Omicron, it makes sense for asset prices to rebound," said Saxo Markets senior market analyst Edison Pun.

On Tuesday, MSCI's gauge of stocks across the globe had shed 1.5 per cent, jolted by a warning from drugmaker Moderna that existing vaccines are unlikely to be as effective against the Omicron variant as they are against other strains.

Oil also rebounded after steep falls in the previous session, ahead of a meeting by the Organisation of the Petroleum Exporting Countries.

US West Texas Intermediate crude futures rose 2.5 per cent, to US$67.86 a barrel. Brent crude futures gained 2.7 per cent, to US$71.12 a barrel.

Fed In Focus

The other main issue top of investors' minds was the speed at which the US Fed will taper its massive stimulus programme, and when it will hike interest rates.

JPMorgan Asset Management global market strategist Kerry Craig said: "At present the market focus has been on Omicron and the potential that can disrupt the world, but the real focus should be on the Fed and the rate policy. That's the biggest shock to come out of the last day or so."

On Tuesday, Mr Powell said US central bankers will discuss this month whether to end their bond purchases a few months earlier than had been anticipated, pointing to a strong economy, stalled workforce growth, and high inflation that is expected to last into the middle of next year.

That pushed US Treasury yields higher, especially at the short end of the curve.

The yield on two-year notes, which reflects short-term interest rate expectations, rose to as high as 0.6060 per cent on Wednesday, up from as low as 0.4410 per cent on Tuesday, when traders were speculating the new variant could lead to a more dovish Fed.

Benchmark 10-year notes also sold off, last yielding 1.4800 per cent, up from Tuesday's 2½ month low of 1.4443 per cent.

Rising yields caused the dollar to steady against most peers and gain ground on the Japanese currency, rising to 113.4 yen, with the safe haven yen hurt by the risk friendlier mood.

That sentiment also helped the Aussie dollar, which rose 0.6 per cent from Tuesday's 32 month low.

Gold, despite all the excitement, saw little safe haven demand with the spot price at US$1,779 an ounce, up 0.3 per cent.