TOKYO (Reuters) - Asian shares crept higher on Tuesday, tracking the overnight gains in U.S. stocks on optimism for progress in resolving the U.S. budget crisis before the year-end deadline.
Expectations of more monetary easing kept the yen soft.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, after ending an eight-day winning streak on Monday as investors took profits from last week's rally.
Australian shares rose 0.6 percent, lifted by a rise in iron ore prices to a five-month high and by gains on Wall Street. South Korean shares opened up 0.4 percent.
Global shares advanced on Monday, supported by signs of tentative progress on negotiations to avert the U.S. "fiscal cliff" of tax hikes and spending cuts due to set in at the start of next year.
While the fiscal cliff remains a major focus for markets, prices may become unlikely to rise with players taking profits to close their books before leaving for the holidays, traders said.
U.S. President Barack Obama and top Republican John Boehner met at the White House on Monday, with simple evidence of ongoing communication keeping alive hopes that Washington will be able to resolve the budget crisis.
"There was no meaningful breakthrough in the negotiations, but the high-level meetings do improve investor sentiment," said Kim Soon-young, an analyst at IBK Securities.
The dollar steadied around 83.91 yen, off a 20-month high of 84.48 yen hit on Monday but well above its late New York levels on Friday.
The yen slumped broadly on Monday after the Liberal Democratic Party of Japan's election triumph opened the way for a cabinet headed by LDP leader Shinzo Abe, who is calling for far more aggressive monetary stimulus and huge public works spending to rescue Japan out of decades-long deflation.
Abe, who is due to be confirmed as Japan's next premier on December 26, applied fresh pressure on the Bank of Japan on Monday, saying that the election result reflected strong public support for his views, which he hoped the BOJ would take into account at its two-day policy meeting starting on Wednesday.
"The dollar has more upside against the yen ahead of the BOJ's meeting, with expectations for some additional easing steps being strengthened after Abe's comments yesterday," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
"The corrective fall in the dollar/yen after the election was small and it's crawling up because the yen weakening trend is still intact. But after the BOJ meeting, there will likely be pre-holiday profit-taking, pushing the dollar/yen down by 1-2 yen," he said.
By putting pressure on the yen, Abe's election win was also seen as supportive for Japanese stocks as a weak yen improves prospects for Japanese corporate export earnings.
After closing Monday at a 8-1/2-month peak on the yen's slide, Japan's Nikkei stock average <.n225> was likely to pause for now. The Nikkei opened 0.2 percent higher. <.t/>
"The so-called Abe trade is likely to be over. I think the market will see some sell-off but will be supported by dip buying," said Takashi Hiroki, chief strategist at Monex Inc.
Asset returns in 2012: http://link.reuters.com/nyw85s
Japan economic snapshot: http://link.reuters.com/jyc64t
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U.S. crude rose 0.3 percent to $87.44 a barrel.
(Additional reporting by Dominic Lau in Tokyo and Somang Yang in Seoul; Editing by Eric Meijer)
Source: http://news.yahoo.com/asian-shares-inch-higher-fiscal-cliff-hopes-005448351--finance.html
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