Asian stocks also fell, tracking weakness on Wall Street as firmer commodity prices were offset by lingering concerns over the economic outlook for the United States as well as euro zone debt woes.

The euro, which had rallied after better-than-expected German business confidence data on Tuesday, edged back in the direction of a two-month low of $1.3968 hit earlier this week as worries over Greece’s finances cast a pall over the single currency. It has lost roughly 6 percent since early May.

Speculative selling of the euro intensified on vague market talk that Greece may call a snap election and as investors trimmed risky positions, with a drop in U.S. stock index futures adding to pressure on the euro.

Europe’s policy options to avert a Greek debt default appear to be dwindling fast, casting a pall over the single currency and fuelling fears of a chain reaction in other heavily indebted countries in the 17-nation euro area.

“Concern about Spain and Italy might be overblown, but the Greece issue is not going away, and if Greece restructures, that may open the door for Ireland and Portugal.” said Brian Dolan, chief strategist at Forex.com.

The U.S. dollar .DXY rose 0.37 percent against a basket of major currencies.

A Greek debt default would hurt other peripheral euro zone states and could push Portuguese and Irish debt into junk territory, Moody’s said on Tuesday, warning it would classify most forms of restructuring as a default.

As investors reduced exposure to riskier assets, MSCI’s index of Asia-Pacific stocks outside Japan fell 0.7 percent while the Nikkei .N225 closed down 0.6 percent.

According to research by TrimTabs, global equity ETF investors are increasingly bearish on Asia and Asia equity ETFs redeemed $499 million in the past week, the heaviest weekly outflow in a year.

South Korea, Japan, China, and India ETFs posted the largest outflows, while Indonesia ETFs managed to take in money. Mutual fund investors are also selling Asia.

Oil slid as the dollar rebounded against the euro, giving up some of its 2 percent rise overnight after Goldman Sachs raised its price forecasts for Brent crude. Brent crude for July delivery fell below $112 a barrel.

Gold inched down after having rallied to its highest level in three weeks in the previous session, but bullion priced in euro struck a record on concerns about the impact of a possible debt default by Greece on other euro zone economies.

Spot gold fell to $1,522.42 an ounce after rising as high as $1,527.45 on Tuesday, its strongest since May 4.

Volatile commodity prices also kept investors on edge, with gold firming to a near two-week high as buyers looked to safe-haven assets.

Moody’s Investors Service said other stressed European sovereign debt would be affected in case of a Greek default, and separately reported it was reviewing the rating of some UK banks for a possible credit rating downgrade.

Standard & Poor’s cut its outlook for Italy to “negative” from “stable” on Saturday, while a crushing defeat for Spain’s ruling socialists in local elections raised worries about the government’s ability to curtail debt.

Madrid, which will auction more short-term debt later on Tuesday, has been seen as an example of fiscal reform.

“The huge storm of risk reduction will rip through markets if the focus turns to Spain and Italy. It’s clear they don’t have money to bail out these countries,” said Ayako Sera, a market economist at Sumitomo Trust and Banking.

“What we are seeing now could just be the beginning of it,” she added.

The dollar hit an eight-week high against the pound and edged closer to a 10-week high versus the euro on euro zone’s debt crisis worries.

The euro was last at $1.4042 and the index of the dollar against six major currencies was up 0.1 percent at 76.178 points. On Monday, when the local market closed the euro had been at $1.4017.

But euro buying from Asian central banks as well as stable commodity and regional share prices helped stem the euro’s decline in Asian trade, with some traders saying that in the near-term there might be a small rebound for the single currency.

The euro fell to a two-month low of $1.3968 on Monday, where it had support from its 100-day moving average.

The euro has been suffering from a lack of consensus among European policy-makers on how to deal with Greece, with many opposing the idea of debt restructuring while some market players think it is inevitable.

“The euro may not stop falling until European policy-makers come up with a more reassuring stance on debt problems. Before that happens, the euro could fall to around $1.35,” Sumitomo Trust’s Sera said.

Euro zone debt graphics, click r.reuters.com/hyb65p

Interactive timeline, click link.reuters.com/sec69r

Despite the euro zone debt woes, Asian stocks were mostly steady with MSCI’s index of Asia-Pacific stocks outside Japan up 0.1 percent and Japan’s benchmark Nikkei closing up 0.2 percent after earlier hitting a fresh five-week low.

Seoul shares rebounded 0.3 percent after sharp falls in the previous session,d helped by techs and refiners, but trade was cautious amid worries about Europe and a weakening global economic backdrop.

“It appears that a lot of selling is coming from European funds, as worries about the region’s debt issues deepens,” said Kim Seong-hong, a market analyst at Samsung Securities.

“Although the market is bouncing, momentum is pretty fragile. Direction can change anytime,” Kim added.

Gold rose to its highest level in almost two weeks on worries that Europe’s debt crisis was spreading, sending euro-denominated bullion to a record above 1,081 euros an ounce.

Spot gold was last at $1,517.81 an ounce, having hit an intraday high at $1,517.74 an ounce, its strongest since May 11.

Brent crude futures rebounded from the previous day’s sharp fall as expectations that strong oil demand was trimming inventories overrode concerns about Europe’s debt crisis.

Brent crude for July was up 59 cents at $110.69 a barrel by 0309 GMT. U.S. crude for July gained 60 cents to $98.28 a barrel. Both benchmarks had fallen by over $2 on Monday to end below their 100-day moving averages.

Volatile commodity prices also kept investors on edge, with gold firming to a near two-week high as buyers looked to safe-haven assets.

Moody’s Investors Service said other stressed European sovereign debt would be affected in case of a Greek default, and separately reported it was reviewing the rating of some UK banks for a possible credit rating downgrade.

Standard & Poor’s cut its outlook for Italy to “negative” from “stable” on Saturday, while a crushing defeat for Spain’s ruling socialists in local elections raised worries about the government’s ability to curtail debt.

Madrid, which will auction more short-term debt later on Tuesday, has been seen as an example of fiscal reform.

“The huge storm of risk reduction will rip through markets if the focus turns to Spain and Italy. It’s clear they don’t have money to bail out these countries,” said Ayako Sera, a market economist at Sumitomo Trust and Banking.

“What we are seeing now could just be the beginning of it,” she added.

The dollar hit an eight-week high against the pound and edged closer to a 10-week high versus the euro on euro zone’s debt crisis worries.

The euro was last at $1.4042 and the index of the dollar .DXY against six major currencies was up 0.1 percent at 76.178 points. On Monday, when the local market closed the euro had been at $1.4017.

But euro buying from Asian central banks as well as stable commodity and regional share prices helped stem the euro’s decline in Asian trade, with some traders saying that in the near-term there might be a small rebound for the single currency.

The euro fell to a two-month low of $1.3968 on Monday, where it had support from its 100-day moving average.

The euro has been suffering from a lack of consensus among European policy-makers on how to deal with Greece, with many opposing the idea of debt restructuring while some market players think it is inevitable.

“The euro may not stop falling until European policy-makers come up with a more reassuring stance on debt problems. Before that happens, the euro could fall to around $1.35,” Sumitomo Trust’s Sera said.

Despite the euro zone debt woes, Asian stocks were mostly steady with MSCI’s index of Asia-Pacific stocks .MIAPJ0000PUS outside Japan up 0.1 percent and Japan’s benchmark Nikkei .N225 closing up 0.2 percent after earlier hitting a fresh five-week low.

Seoul shares rebounded 0.3 percent after sharp falls in the previous session, helped by techs and refiners, but trade was cautious amid worries about Europe and a weakening global economic backdrop.

“It appears that a lot of selling is coming from European funds, as worries about the region’s debt issues deepens,” said Kim Seong-hong, a market analyst at Samsung Securities.

“Although the market is bouncing, momentum is pretty fragile. Direction can change anytime,” Kim added.

Gold rose to its highest level in almost two weeks on worries that Europe’s debt crisis was spreading, sending euro-denominated bullion to a record above 1,081 euros an ounce.

Spot gold was last at $1,517.81 an ounce, having hit an intraday high at $1,517.74 an ounce, its strongest since May 11.

Brent crude futures rebounded from the previous day’s sharp fall as expectations that strong oil demand was trimming inventories overrode concerns about Europe’s debt crisis.

Brent crude for July was up 59 cents at $110.69 a barrel by 4:09 a.m. British time. U.S. crude for July gained 60 cents to $98.28 a barrel. Both benchmarks had fallen by over $2 on Monday to end below their 100-day moving averages.

Volatile commodity prices also kept investors on edge, with gold firming to a near two-week high as buyers looked to safe-haven assets.

Moody’s Investors Service said other stressed European sovereign debt would be affected in case of a Greek default, and separately reported it was reviewing the rating of some UK banks for a possible credit rating downgrade.

Standard & Poor’s cut its outlook for Italy to “negative” from “stable” on Saturday, while a crushing defeat for Spain’s ruling socialists in local elections raised worries about the government’s ability to curtail debt.

Madrid, which will auction more short-term debt later on Tuesday, has been seen as an example of fiscal reform.

“The huge storm of risk reduction will rip through markets if the focus turns to Spain and Italy. It’s clear they don’t have money to bail out these countries,” said Ayako Sera, a market economist at Sumitomo Trust and Banking.

“What we are seeing now could just be the beginning of it,” she added.

The dollar hit an eight-week high against the pound and edged closer to a 10-week high versus the euro on euro zone’s debt crisis worries.

The euro was last at $1.4042 and the index of the dollar .DXY against six major currencies was up 0.1 percent at 76.178 points. On Monday, when the local market closed the euro had been at $1.4017.

But euro buying from Asian central banks as well as stable commodity and regional share prices helped stem the euro’s decline in Asian trade, with some traders saying that in the near-term there might be a small rebound for the single currency.

The euro fell to a two-month low of $1.3968 on Monday, where it had support from its 100-day moving average.

The euro has been suffering from a lack of consensus among European policy-makers on how to deal with Greece, with many opposing the idea of debt restructuring while some market players think it is inevitable.

“The euro may not stop falling until European policy-makers come up with a more reassuring stance on debt problems. Before that happens, the euro could fall to around $1.35,” Sumitomo Trust’s Sera said.

Despite the euro zone debt woes, Asian stocks were mostly steady with MSCI’s index of Asia-Pacific stocks outside Japan up 0.1 percent and Japan’s benchmark Nikkei .N225 closing up 0.2 percent after earlier hitting a fresh five-week low.

Seoul shares rebounded 0.3 percent after sharp falls in the previous session, helped by techs and refiners, but trade was cautious amid worries about Europe and a weakening global economic backdrop.

“It appears that a lot of selling is coming from European funds, as worries about the region’s debt issues deepens,” said Kim Seong-hong, a market analyst at Samsung Securities.

“Although the market is bouncing, momentum is pretty fragile. Direction can change anytime,” Kim added.

Gold rose to its highest level in almost two weeks on worries that Europe’s debt crisis was spreading, sending euro-denominated bullion to a record above 1,081 euros an ounce.

Spot gold was last at $1,517.81 an ounce, having hit an intraday high at $1,517.74 an ounce, its strongest since May 11.

Brent crude futures rebounded from the previous day’s sharp fall as expectations that strong oil demand was trimming inventories overrode concerns about Europe’s debt crisis.

Brent crude for July was up 59 cents at $110.69 a barrel by 11:09 p.m. EDT. U.S. crude for July gained 60 cents to $98.28 a barrel. Both benchmarks had fallen by over $2 on Monday to end below their 100-day moving averages.

The euro nursed heavy losses early in Asia while the yen
gained across the board as worries about sovereign debt problems
in Europe and the United States prompted investors to unwind
carry trades.

Standard & Poor’s threatened on Monday to downgrade the
United States’ prized AAA credit rating unless the Obama
administration and Congress find a way to slash the yawning
federal budget deficit within two years.

S&P slapped a negative outlook on the country’s top-notch
credit rating and said there’s at least a one-in-three chance
that it could eventually cut it.

The Dow Jones Industrial Average fell 1.1 percent to
12201.59.

Japan’s Nikkei stock average fell as much as 1.5
percent after the S&P cut before closing down 1.2 percent at
9,441.03.

Hong Kong’s Hang Seng also shed 1.5 percent, then
climbed a bit to be off 1.2 percent. Foreign investors trimmed
holdings they put on in the past few weeks.

Outside Japan, MSCI’s index of Asia-Pacific stocks
slipped further away from a nearly three-year
high hit last week. It was down 1.1 percent dragged down by
falls in energy and materials.

The S&P outlook cut “is likely to shift more capital away
from the U.S. and other developed markets towards emerging
markets because in relative terms, emerging markets will look
safer, more atractive, and investors will no longer look at the
US with the same kind of confidence they did in the past,”
Dariusz Kowalczyk of CACIB.

He added that S&P announcement “would be supportive for the
currencies and asset prices throughout the emerging world.”

Despite the threat of a S&P ratings cut, U.S. Treasuries
were mostly steady as other concerns, such as falling stock
prices, appeared to trump the outlook revision.

After an earlier sell-off, the 30-year bond was
10/32 higher in price and yielding 4.45 percent, down from 4.47
percent late Friday.

The gap between two-year note yields and 30-year bond yields
briefly hit a recent high of 384 basis points, or the largest
spread since March 17, but it was last at 379 basis points, up
from 377 basis points late on Friday.

Traders and analysts said the S&P threat would likely have
little lasting impact, and even the euro’s slide on worries
about Greece seemed more driven by profit-taking after the
euro’s rise ran out of steam above $1.45 last week.

The euro fell to as low as 116.41 yen — the
lowest since March 30. The dollar also underperformed the yen,
falling to a near three-week low around 82.16 , before
recovering slightly to last stand at 82.59.

The Australian and New Zealand dollars slipped on the U.S.
dollar and yen as falling stocks, escalating euro debt woes and
a credit warning for U.S. debt sparked a wave of risk aversion.

The Australian dollar slipped to $1.0465, from
$1.0510 late in New York and a high of $1.0572 on Monday. It
dipped as far as $1.0454 offshore after S&P’s warning to
Washington.[ID:nN18195555].

Spot gold rose as much as nearly 1 percent in early
morning trade, before trimming gains to $1,490.95 an ounce at
0559 GMT, up 0.7 percent. In the previous session, gold reached
a record high of $1,497.20
ICE Brent crude LCOc1 for June fell 32 cents to $121.29 a
barrel by 0315 GMT. U.S. crude CLc1 was down 40 cents at
$106.72 a barrel.

The Reserve Bank of Australia (RBA) painted an upbeat
outlook for the local and global economies in minutes of the
April policy-setting meeting released on Tuesday.

* For Reuters Global Investing Blog, click on

here

* For the MacroScope Blog, click on

blogs.reuters.com/macroscope

* For Hedge Fund Blog, click on

blogs.reuters.com/hedgehub

(Editing by Richard Borsuk)

The euro nursed heavy losses early in Asia while the yen
gained across the board as worries about sovereign debt problems
in Europe and the United States prompted investors to unwind
carry trades.

Spot gold prices firmed below their record high, as the S&P
move and other developments further stoked investors’ interest
in bullion.

The S&P cut in outlook on United States debt jacks up
pressure on the Obama administration and Congress to slash the
yawning federal budget deficit.

S&P, which assigns ratings to guide investors on the risks
involved in buying debt instruments, said the move signals at
least a one-in-three chance that it could eventually cut its
long-term AAA rating on the United States within two years.

Japan’s benchmark Nikkei average was down 1.2
percent, or 113.89 points at 9,442.76, while the broader Topix
shed 1.0 percent to 827.88.

The euro fell to as low as 116.41 yen — the
lowest since March 30. The dollar also underperformed the yen,
falling to a near three-week low around 82.16 , before
recovering slightly to last stand at 82.59.

Spot gold gained 0.8 percent to $1,493.29 an ounce
by 0019 GMT, below the record high of $1,497.20 hit in the
previous session.

NYMEX crude for May delivery CLc1, which expires on
Tuesday, was down 6 cents at $107.06 a barrel by 0035 GMT, after
settling down $2.54 at $107.12 a day earlier.

Brent crude for June LCOc1 fell 1 cent to $121.60 a barrel
versus a $121.61 settlement in the previous session.

* For Reuters Global Investing Blog, click on

here

* For the MacroScope Blog, click on

blogs.reuters.com/macroscope

* For Hedge Fund Blog, click on

blogs.reuters.com/hedgehub

(Editing by Richard Borsuk)

As an increasing number of governments from Britain to New
Zealand to South Korea advised citizens to leave quake-affected
northern Japan, airlines mobilised for mainly outbound traffic
from one of the world’s biggest cities.

Japan has been taking measures to contain a crisis at the
Fukushima nuclear power plant crippled by the earthquake and
tsunami that devastated the northeast on Friday.

The U.S. State Department said the government had chartered
aircraft to help Americans leave Japan and had authorised the
voluntary departure of family members of diplomatic staff in
Tokyo, Nagoya and Yokohama — about 600 people.

“The situation has deteriorated in the days since the
tsunami and … the situation has grown at times worse with
potential greater damage and fallout from the reactor,” White
House spokesman Jay Carney told reporters.

The U.S. travel advisory came after Australia urged citizens
with non-essential roles in Japan to consider leaving Tokyo and
the eight prefectures most damaged by the earthquake due to
infrastructure problems rather than nuclear concerns.

“We have a real problem in terms of the infrastructure in
Japan. We have uncertainty of power supply, we have problems
with train services, we have problems with public transport
services, many schools have closed and there is this repeated
series of aftershocks,” Foreign Minister Kevin Rudd said.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Full coverage on [ID:nTOPJP]

FACTBOX on travel warnings: [ID:nL3E7EG06Y]

FACTBOX on airline responses: [ID:nL3E7EG075]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Britain said it was chartering flights from Tokyo to Hong
Kong, which would cost 600 pounds ($967) per person. Britons
directly affected by the tsunami will be offered the flight for
free.

France and Germany have also advised citizens in Japan to
get out or head to southern Japan. The French embassy in Tokyo
said it had asked Air France (AIRF.PA: Quote, Profile, Research, Stock Buzz) to prepare planes for the
evacuation of French nationals.

Air India increased flights and used bigger planes to help
bring back Indians from Japan. It has been using a Boeing
747-400 jumbo jet with a capacity of 423 passengers, instead of a
smaller Boeing 777-300ER, a spokesman said. [ID:nL3E7EH1D1]

Health authorities in several countries responded to
concerns about the possible health impact from radiation
starting checks on people, planes and boats.

There were no immediate reports of contamination, although
officials in South Korea and Taiwan said some passengers
arriving from Japan had been observed with slightly higher
levels of radiation. [ID:nL3E7EH1TI]

German carrier Lufthansa (LHAG.DE: Quote, Profile, Research, Stock Buzz) is diverting flights away
from Tokyo to Osaka and Nagoya, at least until the weekend, and
said it had begun screening aircraft for radiation.

“As a precautionary measure, we have been having the
aircraft returning from Japan scanned for radioactivity by
experts. So far, all results are negative,” Chief Executive
Christoph Franz said. [ID:nFAB015993]

Air France (AIRF.PA: Quote, Profile, Research, Stock Buzz) said it was checking planes and
offering medical advice to crew, 10 of whom agreed to be scanned
for radiation by France’s nuclear safety agency. The results of
all the tests were negative, a spokeswoman said.

Vietnam’s prime minister, Nguyen Tan Dung, called for plans
to check for radiation on citizens coming back from Japan.

South Korea set up radiation detection gates at Incheon and
Gimpo international airports that have direct flights to Japan,
the Yonhap news agency reported, and planned to set up similar
monitoring for people coming back on ferries.

Airlines did not provide much information on passenger loads
in and out of Japan, but travellers reported nearly one-way
traffic by passengers eager to leave the country.

Japan-bound passengers said flights were nearly empty.

Scandinavian airline SAS (SAS.ST: Quote, Profile, Research, Stock Buzz), however, said planes out
of Copenhagen to Tokyo via Beijing had not been leaving empty.

“Some have been half full. We … are seeing a demand from
Japanese citizens to go back to Japan,” a spokeswoman said.

Vietnam Airlines said it would halve fares for those in
Vietnam buying tickets for Vietnamese relatives in Japan, and
put larger jets on flights from Tokyo to Hanoi.
(Reporting by Reuters bureaus; Writing by Sugita Katyal and
Victoria Bryan; Editing by Tim Hepher and Jon Loades-Carter)
($1 = 0.6203 pound)

The euro nursed heavy losses early in Asia as worries about European sovereign debt problems intensified following Moody’s credit rating downgrade for Greece on Monday.

U.S. crude for April dipped to $104.63 a barrel, easing further from a 2-1/2 year high hit on Monday, after Kuwait’s oil minister said the Organization of the Petroleum Exporting Countries (OPEC) was considering boosting supply to offset disruptions in Libya, where government forces are trying to quash a popular uprising.

North Sea Brent crude fell nearly 50 cents to $112.60.

An official oil output increase by OPEC would signal the group’s determination to cap prices, but unrest in the region has fueled concerns about more supplies being cut off.

“Oil has stopped rising for now, but it hasn’t really retreated to levels that allows aggressive buying in risky assets, so investors will still be jittery,” said Hiroichi Nishi, general manager at Nikko Cordial Securities.

Japan’s Nikkei benchmark extended gains for a second day after the pullback in oil prices lifted Wall Street but investors remained worried that high fuel prices could stunt global economic growth and erode corporate earnings.

By midmorning, the benchmark Nikkei .N225 was up 1.3 percent, or 133.52 points, to 10,659.55. The broader Topix index gained 1.3 percent to 951.07. It broke above its 25-day moving average, key technical level closely watched by Japanese traders, now at 10,630.45.

MSCI’s index of Asia Pacific shares outside Japan .MIAPJ0000PUS edged up 0.01 percent, led by gains in consumer durables and financials.

The Korea Composite Stock Price Index .KS11 (KOSPI) was up 0.20 percent at 2,000.28 points as of 9:05 p.m. ET after crude oil prices dipped, with banks surging ahead of the central bank’s interest rate meeting on Thursday.

The Bank of Korea is expected to raise rates to curb price pressures after surprising markets by leaving rates unchanged in February.

EURO SLIPS

The euro fell for a third straight session against the dollar, with further pressure likely as investors remained unconvinced that a European Union summit on Friday to overhaul the euro zone economies will yield any results.

Concerns about Europe’s debt problems have been on the rise since Moody’s cut Greece’s credit ratings by three notches on Monday, signaling more downgrades are on the way and adding to fears that Athens will have to restructure its debt.

Failure to break through resistance above $1.40 prompted investors to trim long euro/dollar positions, sending the common currency to a low around $1.3860 overnight. It last traded at $1.3881.

With the euro on the back foot, the dollar rose against a basket of major currencies. The dollar index .DXY inched up to 76.776, pulling away from a four-month low of 76.124 set on Monday.

U.S. stocks rallied as crude prices retreated. The Dow Jones industrial average .DJI rose 1.03 percent, while the Standard & Poor’s 500 Index .SPX gained 0.89 percent.

Gold steadied on Wednesday after rising to record highs as the prospects of further unrest in oil-rich Middle Eastern countries has driven investors to seek safe-haven assets.

Gold eased below $1,430 an ounce, falling further from Monday’s record high after the drop in oil prices eased some concerns about inflation. Spot gold was at $1,426.80 an ounce.

(Writing by Sugita Katyal; Editing by Ramya Venugopal)

The euro nursed heavy losses early in Asia as worries about European sovereign debt problems intensified following Moody’s credit rating downgrade for Greece on Monday.

U.S. crude for April dipped to $104.63 a barrel, easing further from a 2-1/2 year high hit on Monday, after Kuwait’s oil minister said the Organization of the Petroleum Exporting Countries (OPEC) was considering boosting supply to offset disruptions in Libya, where government forces are trying to quash a popular uprising.

North Sea Brent crude fell nearly 50 cents to $112.60.

An official oil output increase by OPEC would signal the group’s determination to cap prices, but unrest in the region has fueled concerns about more supplies being cut off.

“Oil has stopped rising for now, but it hasn’t really retreated to levels that allows aggressive buying in risky assets, so investors will still be jittery,” said Hiroichi Nishi, general manager at Nikko Cordial Securities.

Japan’s Nikkei benchmark extended gains for a second day after the pullback in oil prices lifted Wall Street but investors remained worried that high fuel prices could stunt global economic growth and erode corporate earnings.

By midmorning, the benchmark Nikkei .N225 was up 1.3 percent, or 133.52 points, to 10,659.55. The broader Topix index gained 1.3 percent to 951.07. It broke above its 25-day moving average, key technical level closely watched by Japanese traders, now at 10,630.45.

MSCI’s index of Asia Pacific shares outside Japan .MIAPJ0000PUS edged up 0.01 percent, led by gains in consumer durables and financials.

The Korea Composite Stock Price Index .KS11 (KOSPI) was up 0.20 percent at 2,000.28 points as of 0205 GMT after crude oil prices dipped, with banks surging ahead of the central bank’s interest rate meeting on Thursday.

The Bank of Korea is expected to raise rates to curb price pressures after surprising markets by leaving rates unchanged in February.

EURO SLIPS

The euro fell for a third straight session against the dollar, with further pressure likely as investors remained unconvinced that a European Union summit on Friday to overhaul the euro zone economies will yield any results.

Concerns about Europe’s debt problems have been on the rise since Moody’s cut Greece’s credit ratings by three notches on Monday, signaling more downgrades are on the way and adding to fears that Athens will have to restructure its debt.

Failure to break through resistance above $1.40 prompted investors to trim long euro/dollar positions, sending the common currency to a low around $1.3860 overnight. It last traded at $1.3881.

With the euro on the back foot, the dollar rose against a basket of major currencies. The dollar index .DXY inched up to 76.776, pulling away from a four-month low of 76.124 set on Monday.

U.S. stocks rallied as crude prices retreated. The Dow Jones industrial average .DJI rose 1.03 percent, while the Standard & Poor’s 500 Index .SPX gained 0.89 percent. .N

Gold steadied on Wednesday after rising to record highs as the prospects of further unrest in oil-rich Middle Eastern countries has driven investors to seek safe-haven assets.

Gold eased below $1,430 an ounce, falling further from Monday’s record high after the drop in oil prices eased some concerns about inflation. Spot gold was at $1,426.80 an ounce.

(Writing by Sugita Katyal; Editing by Ramya Venugopal)

U.S. crude oil futures fell $1.30 to $104.14 and
Brent crude dropped to $113.60 after reports that Libyan
leader Muammar Gaddafi was looking for a way to step down and as
Kuwait’s oil minister said OPEC was in talks to increase
production to ease worries about Middle East supply disruptions.

European shares were expected to edge up, rebounding from
losses the previous day, as crude prices retreated. U.S. stock
index futures rose 0.6 percent, pointing to a firmer
opening on Wall Street. .

“The market’s fundamentals are recovering on corporate
earnings so sentiment for the longer term is good. But for the
short-term, the market may see some correction due to continuing
worries about developments in the Middle East,” said Hajime
Nakajima, deputy general manager at Cosmo Securities.

Market players have been focused on the prospect of a
European Central Bank interest rate rise as early as next month,
but the euro zone debt crisis returned to the fore on Monday,
when Moody’s slashed Greece’s sovereign rating by three notches.

The euro edged higher on Tuesday but crowded bets on the
currency could cause a near-term decline before it is able to
take another shot at its November peak just above $1.4280.
.

Japan’s Nikkei benchmark edged higher as investors covered
short positions after selling heavily on Monday, but analysts
said gains may be limited as concerns about turmoil in the
Middle East and high oil prices persist.

Japan’s Nikkei closed up 0.19 percent while the
broader Topix shed 0.26 percent.

After an early fall, MSCI’s index of Asia Pacific shares
outside Japan was up 0.5 percent helped by gains
in energy and industrial stocks.

Hong Kong’s Hang Seng Index rose 1.3 percent, helped
by a broadly stronger energy sector and gains in Chinese large
caps.

Seoul shares were up 0.81 percent after sharp falls
in the previous session, lifted by shipbuilders and financials
but falls in technology plays dented upside momentum.

“It will be difficult for risk markets such as equities and
industrial commodities to push into higher ranges whilst the
threat to oil supplies remains elevated,” said Ric Spooner,
chief market analyst at CMC Markets in Australia.

U.S. stocks fell on Monday, with the S&P 500 down 0.8
percent and the Nasdaq off 1.4 percent.

The prospects of further unrest in oil-rich Middle Eastern
countries has driven investors to seek safe-haven assets.

Spot gold was little changed at $1,430.55 an ounce by
0504 GMT, having rallied as high as $1,444.40 an ounce on
Monday, a record high, as violence flared in Libya and after the
downgrade of Greece’s credit rating reignited worries about euro
zone sovereign debt.

(Additional writing by Alex Richardson; Editing by Nick Macfie
and Ramya Venugopal)