TOKYO (REUTERS) - Asian shares rose on Friday (Nov 17) as strong US earnings and a step forward in the US Congress on tax reform brightened the mood, even though investors noted that many more hurdles must be passed to reach a final deal on tax cuts.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent while Japan's Nikkei gained 0.9 per cent, extending its recovery from a near three-week intraday low hit the previous day.
Wall Street's main indexes rose sharply on Thursday, boosted by strong gains in Wal-Mart and Cisco following their earnings.
The S&P 500 advanced 0.82 per cent to a closing record high of 6,793.29.
MSCI's broadest gauge of the world's stock markets stemmed its five-day losing streak and posted its biggest daily gain in two months, of 0.8 per cent, on Thursday.
Junk bond prices rebounded sharply, with iShares High Yield Bond ETF gaining almost one percent to recoup more than half of its losses since the start of the month.
"The markets had been wary of fall in credit products during the last few days but it seems we just had a healthy correction. As the European Central Bank and the Bank of Japan are still pumping liquidity, the world's asset markets will be supported,"said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
The US House of Representatives approved a broad package of tax cuts sought by President Donald Trump, passing its first, if smallest, hurdle and providing a catalyst for fresh buying in risk assets.
The tax debate now moves to the US Senate, where that chamber's separate plan has already encountered resistance from some Republicans. No decisive Senate action is expected until after next week's Thanksgiving holiday on next Thursday.
The positive mood on Wall Street helped to lift the yield on two-year.. notes to a nine-year high, with a Fed rate hike in December seen almost as a done deal.
Fed funds rates futures are now pricing in about a 90 per cent chance of another rate hike by June next year, the highest level in recent months and up from about 50 per cent just over a month ago.
As the dollar gained, the euro edged down to US$1.1769, slipping further from its one-month peak of US$1.1862 touched on Wednesday.
The dollar ticked up to 113.09 yen, extending its rebound from Wednesday's 112.47, its lowest level in almost a month.
Elsewhere bitcoin hit a record high, quickly recovering from its 30-per cent plunge last week.
Oil prices have slipped from two-year highs hit last week on signs that US supply is rising and could potentially undermine OPEC's efforts to tighten the market.
US light crude stood at $55.22 a barrel, little changed from its levels in the past couple of days but down 2.7 per cent on the week.