Asian shares hit three-month high on hopes for Europe

Asian shares extended gains to a third straight session today, reaching a three-month high, as investors continued to bet that policymakers will soon take decisive action to address the Eurozone fiscal crisis and declining global growth.

Oil and copper eased from their highs but remained underpinned by such hopes, while the euro stabilised and safe-haven government bonds suffered from weakening demand.

But European stocks were likely to be more guarded, with US stock futures signalling a softer Wall Street start. Financial spreadbetters called the main indexes in London, Paris and Frankfurt to open down as much as 0.7 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent, after world stocks climbed to a three-month high on Tuesday, shrugging off soft data showing a further contraction in Italy and a fall in factory orders in Germany.
Japan's Nikkei stock average rose 0.7 per cent.

"Markets are undergoing a small correction from excessive pessimism as the US jobs data showed that conditions were not one-sidedly taking a turn for the worse," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank, adding that a lack of negative news from Europe helped keep the tone positive.