Asian shares rise but US fiscal concerns linger

HONG KONG - Asian shares rose Thursday, with Tokyo scaling a 21-month high thanks to a weaker yen, but pessimism lingered over the prospects of a US "fiscal cliff" deal by the year-end deadline.

Tokyo's benchmark Nikkei 225 index climbed 0.91 per cent, or 92.62 points, to 10,322.98, the highest level since March 11 last year when a massive quake struck Japan, sparking a tsunami and the worst atomic crisis in a generation.

The dollar rose to its highest level in more than two years against the yen as Prime Minister Shinzo Abe took office, raising expectations that the Bank of Japan would initiate more aggressive monetary easing under his leadership.

Seoul closed 0.26 per cent, or 5.10 points, higher at 1,987.35, and Sydney gained 0.28 per cent, or 12.8 points, to 4,648.0.

Hong Kong climbed 0.35 per cent, or 78.6 points, to 22,619.78, while Shanghai eased 0.60 per cent, or 13.23 points, to 2,205.90.

Regional gains came despite overnight falls on Wall Street as investors continue to fret over the looming fiscal cliff - a series of tax hikes and spending cuts worth some $600 billion due to take effect in January.

The Dow Jones Industrial Average was down 0.19 per cent to finish the session at 13,114.59.

The broad-market S&P 500 lost 6.83 points (0.48 per cent) to end at 1,419.83, while the tech-rich Nasdaq Composite shed 22.44 points (0.74 per cent) to 2,990.16.

US lawmakers are set to return to the negotiating table after the Christmas holidays in a last-ditch effort to reach a deal, with experts warning that going over the cliff could drive the world's biggest economy back into recession.

The Treasury Department said Wednesday the government would hit its legal borrowing limit by Monday, setting in motion emergency measures to keep the government operating for several more weeks.

The Treasury's manoeuvring is designed to put off until February or March the prospect of a full-blown debt crisis, indicating that the US budget wrangling could continue well into 2013.

Despite those concerns the dollar made steady gains, hovering around 85.79 yen in afternoon Tokyo trade, the highest level since September 2010.

The euro fetched 113.57 yen (S$1.62) and US$1.3242 (S$1.62) compared with 113.19 yen and $1.3230 in New York late Wednesday.

Oil prices were mixed, with New York's main contract, light sweet crude for delivery in February, adding six cents to US$91.04 a barrel. Brent North Sea crude for February delivery shed 10 cents to US$110.97.

Gold was at US$1,655.26 at 1106 GMT compared with US$1,658.10 late Wednesday.