By Lisa Twaronite
TOKYO (Reuters) - The dollar marked a fresh seven-year high against the yen on Wednesday, which helped lift the Nikkei to a similar closing record, while oil prices recovered on news of a drop in U.S. supply.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down about 0.2 percent. But Japan's Nikkei stock average finished 0.3 percent higher, off its session highs but still closing at its highest level since July 2007.
Financial spreadbetters expected Britain's FTSE 100 to open 17 to 20 points higher, or up 0.3 percent; Germany's DAX to open 35 points higher, or up 0.4 percent; and France's CAC 40 to open 9 points higher, or 0.2 percent.
A pair of surveys showed that China's services sector grew slightly faster in November, though they did not banish fears of the Chinese economy softening.
"Downside pressures on the economy still persist," said Qu Hongbin, an economist at HSBC in Hong Kong, adding that he expected further policy easing in coming weeks.
Wall Street posted solid gains on Tuesday, with the Dow Jones industrial average closing at a record high, boosted by gains in energy shares as investors searched for bargains in the sector.
U.S. crude was off its Asian session highs but still rose 0.5 percent to $67.21 a barrel, after industry group American Petroleum Institute (API) released data on Tuesday showing U.S. crude stocks fell 6.5 million barrels last week.
Brent crude added 0.3 percent to $70.73. Brent and U.S. crude touched five-year lows on Monday in recently volatile trade amid massive oversupply. [O/R]
"The market's volatility is a result of people working out what's going to happen next," said Jonathan Barratt, chief investment officer at Ayers Alliance Securities.
Saudi Arabia would only consider cutting production if other countries, including non-OPEC producer Russia, joined in limits, former Saudi intelligence chief Prince Turki bin Faisal said on Tuesday.
While economists fear the sharp drop in global energy prices could magnify deflationary forces in some countries, both New York Fed President William Dudley and Vice Chair Stanley Fischer this week painted a mostly rosy outlook for the U.S. economy and welcomed cheaper oil.
"Both were relatively optimistic on the U.S. economy and went out of their way to stress upside benefits to the U.S. economy of weaker oil prices," Steven Englander, global head of G10 foreign exchange strategy at CitiFX, said in a note.
"All of this is extremely positive for USD," he added.
Rising Treasury yields added to the appeal of the U.S. dollar on Wednesday. The benchmark 10-year Treasury yield ticked up to 2.290 percent in Asian trade, up from its U.S. close of 2.285 percent.
The greenback pushed about 0.1 percent higher to 119.26 yen, after earlier rising as high as 119.44 on the EBS trading platform, its strongest level since August 2007.
The euro was down about 0.1 percent at $1.2372.
The Australian dollar, already under pressure from sagging oil prices, tumbled to four-year lows on Wednesday after surprisingly weak growth data prompted markets to raise the chance of an interest rate cut next year.
Australian gross domestic product rose by 0.3 percent in the third quarter, less than half what analysts expected and the slowest since early 2013.
That helped push the Aussie as low as $0.8388, its weakest since mid-2010, It was last down 0.5 percent at $0.8403.
Spot gold edged higher as the dollar came off its session highs, rising about 0.2 percent to $1,200.35 an ounce.
(Additional reporting by Koh Gui Qing in Beijing and Florence Tan in Singapore; Editing by Jacqueline Wong and Eric Meijer)
