Asian shares edge up, euro vulnerable on divided EU summit

Reuters: Asian shares rose on Thursday on encouraging US economic data, but prices were capped with investors tense ahead of a European Union summit deeply divided on how to tackle the protracted euro zone debt crisis and stop it spreading further.

On Wednesday, European shares rebounded from a steep sell-off and Wall Street stocks logged their largest gain in week after data showed demand for long-lasting US manufactured goods rebounded more than expected in May, a gauge of planned business spending increased and pending home sales rose in May.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 0.7 per cent before easing to trade up around 0.3 per cent.

Japan’s Nikkei average also gained as much as 1.4 per cent before paring gains to stand up 1 per cent.

“It’s completely a reflection of the fact the European markets rebounded a bit yesterday,” said Guy Stear, head of research with Societe Generale in Hong Kong.

“People don’t want to go short into the meeting, that’s why we have a bit of a short-covering bounce. There’s always a potential in Europe for a surprise,” even if there were few signs for any agreement to be reached at the meeting, he said.