Asian shares rose on Wednesday as firm US corporate earnings, signs of an improving US housing market, and healthy demand for euro zone sovereign debt stoked risk appetite, while focus shifted to the Federal Reserve's meeting.
Markets will be looking for the Federal Reserve's economic assessment and clues to future policy, including the probability of a third round of quantitative easing, when it concludes its two-day policy meeting later on Wednesday.
The US central bank will likely show it is slightly more upbeat on the economy but in little hurry to raise borrowing costs. Investors wishing for clues into the prospect of a further monetary easing may be disappointed.
"The latest round of housing data releases seems to support our view that further easing is not needed. In the short term, equities could struggle if QE3 appears off the table," Barclays Capital analysts said in a research note.
On the other hand, Asia is expected to continue to show resilience to global factors, they said.
"Major auto-exporting economies, such as Korea, Japan and Thailand, are benefiting from stronger global demand, as well as the improvement in supply chains," the analysts said.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3% while Japan's Nikkei average opened up 1.2%.
Investors, spooked by signs of rising political turmoil in Europe threatening to derail the region's austerity commitments, were relieved when successful auctions sent yields on Dutch, Spanish and Italian debt lower on Tuesday, a day after the government in the Netherlands collapsed in a crisis over budget cuts.
Worries over the euro zone staying in a recessionary phase longer than expected and a slowdown in the Chinese economy have also been undermining sentiment, but US earnings so far have proven stronger than expected.
With results in from 153 S&P 500 companies, more than three-fourths have topped analysts' estimates, according to Thomson Reuters Proprietary Research.
Japan's earnings season starts in earnest on Wednesday, with Canon Inc reporting after the close.
Also brightening the market mood was US housing data which showed a steady recovery in the battered sector, with single-family home prices rising in February for the first time in 10 months and upward revisions to past new single-family home sales offsetting a drop in March.
The euro was stuck in a range, hovering just below $1.3200, off a two-week high of $1.3225 reached on Friday.
Asian credit markets improved with the rebound in equities, narrowing the spread on the iTraxx Asia ex-Japan investment-grade index by 3 basis points early on Wednesday.
Oil steadied, with US crude futures inching up 0.2% at $103.76 a barrel, after settling up 44 cents. Brent futures fell 55 cents to settle at $118.16 on Tuesday.
