By Lisa Twaronite and Shinichi Saoshiro
TOKYO (Reuters) - Asian shares rose to near eight-week highs on Thursday as investors bet the European Central Bank will unveil a bond-buying stimulus programme later in the day in an attempt to revive the flagging euro zone economy.
The euro treaded water ahead of the ECB decision, while the Canadian dollar took the spotlight after plunging to a nearly six-year low following the Bank of Canada's surprise move to slash its overnight rate to help cushion the economy from plunging oil prices.
The loonie skidded almost 2 percent - its biggest one-day drop since November 2011 - to as far as $1.2420 per U.S. dollar, and last stood at C$1.2361.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percen, while Japan's Nikkei stock average was flat.
"If the ECB eases policy as expected, the news may be priced in quickly and investors may take profits," said Hikaru Sato, a senior technical analyst at Daiwa Securities in Tokyo.
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The euro was steady at $1.1602, moving away from an 11-year nadir of $1.14595 plumbed last week as the market trimmed short positions ahead of the ECB meeting.
A source told Reuters the ECB's Executive Board has proposed a quantitative easing (QE) program that would enable the bank to buy 50 billion euros ($58 billion) in bonds a month from March.
"The market has been expecting ECB QE for over a quarter and our flows highlight that short positioning is a consensus view. Obviously selling can always return with a strong upside surprise, but we consider flow is an approximation of demand - the data suggests interest is dropping," Richard Cochinos, a strategist at CitiFX Wire, wrote in a client note.
From a flow perspective, Cochinos said that positioning suggests that the euro might be sensitive to a squeeze as leveraged investors take profits on their positions if the ECB simply met or disappointed expectations.
The dollar edged up 0.1 percent to 118.055 following wide swings the previous session after the Bank of Japan held policy steady. The BOJ maintained its bullish inflation outlook for 2016 even as it cut its 2015 projections following falls in oil prices in recent months.
The Australian and New Zealand dollars suffered deep losses as the BOC's shock easing fuelled speculation the Reserve Bank of Australia could soon follow suit.
The Aussie fetched $0.8083, having shed more than 1 percent overnight. It was pulling closer to a six-year trough of $0.8033 set earlier in the month.
The kiwi tumbled to a 2-1/2 year low of $0.7545.
Crude oil prices dipped on expectations that the ECB's decision to launch bond-buying stimulus could boost the dollar and put downward pressure on the commodity.
U.S. crude was down 34 cents at $47.44 a barrel.
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Shri Navaratnam & Kim Coghill)