Asian shares rose on Wednesday, helped by gains on Wall Street, but Japan lagged as exporters such as Honda Motor Co lost ground on news that U.S. consumer confidence has slumped to record lows.
The dollar edged up 0.1 percent to 89.09 yen as gains in stock markets prompted investors to dump the safe-haven Japanese currency, while the dollar dipped versus the euro as players awaited outcome of a Federal Reserve meeting.
The U.S. 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 a two-day policy meeting later in the day, and traders will be scouring its statement for any clues on whether it will buy U.S. government bonds, which could help check longer term borrowing rates.
On Tuesday, the Fed took a step toward easing mortgage foreclosures threatening millions of Americans, announcing that it would write down troubled mortgages to keep people in their homes.
Until the U.S. housing market stabilises, economists see little hope that the economy can pull out of its downward spiral. The MSCI index of Asia-Pacific stocks outside Japan rose 1.2 percent, buoyed by gains on Wall Street, which rallied for the third day in a row on Tuesday on hopes that government efforts to stabilize the U.S. economy will take hold.
The Dow Jones industrial average rose 0.72 percent while the Standard & Poor's 500 Index gained 1.09 percent and the Nasdaq Composite Index rose 1.04 percent, shrugging off a Conference Board report that its index of consumer confidence fell to a record low on January.
But 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.
In Tokyo, the benchmark Nikkei average fell 0.7 percent with shares in Nomura Holdings Inc, Japan's largest brokerage, sliding about 3 percent after it reported a record $3.8 billion quarterly loss on Tuesday.
The loss, reported after market hours, was larger than forecast, and stemmed from the cost of integrating Lehman Brothers' operations, soured trades and exposure to Iceland and Bernard Madoff.
Canon Inc fell after a newspaper reported the electronics maker's operating profit will likely drop about 60 percent this year primarily due to the strong yen. Canon announces its results later on Wednesday.
"Profit-taking is dominating the market after yesterday's huge gains, but I don't expect it to fall too much as external factors are not bad — gains in U.S. stocks and a softer yen," said Soichiro Monji, chief strategist at Daiwa SB Investments,
"But investors have strong concerns about manufacturers' earnings because of their exposure to the deteriorating global economy and a risk that the yen could appreciate going forward."
In Seoul, shares rose after Lunar New Year holidays, led by chip makers after German rival Qimonda filed for insolvency.
The Korea Composite Stock Price Index rose about 4 percent, helped by Samsung Elec and Hynix, which rose more than 14 percent on expectations that Qimonda's move would help drain a glut of chips on the market.
Australian shares gained 0.8 percent, shored up by the banks, while top property stock Westfield Group and building materials group Boral Ltd slid on profit warnings.
"It seems like the market's been conditioned to being knocked around for quite some time now, so we're taking bad news in our stride. That's about the only way you could describe it," said Michael Heffernan, strategist at broker Austock Group.
STERLING CLAWS BACK SOME GROUND
The euro also climbed against the yen while sterling, which hit a record low versus the Japanese currency last week, gained 0.4 percent to 126.18 yen
The euro was up 0.4 percent at $1.3211
U.S. crude oil futures regained some ground after staging their biggest percentage loss since early January. NYMEX crude for March delivery was trading up 77 cents at $42.35 a barrel.
Gold held near its highest in more than three months hit this week, as troubles in the financial sector continued to spur investors to look for havens from market turmoil.
Gold was trading at $900.55 an ounce, up $3.20 from New York's notional close on Tuesday.
