Asian stocks edge up, euro stalls as caution prevails

Asian stocks edged higher and a rally in the euro stalled on Wednesday, as investors looked for more signs that European leaders were tackling a debt crisis that threatens the financial system before committing bolder market bets.

Oil and metals fell and the dollar rose as a rebound in riskier assets ran out of steam and money managers sought safety in the U.S. currency amid signs that a deal on beefing up the euro zone’s rescue fund still faced major hurdles.

Plans to increase the financial firepower of the euro zone’s 440 billion euro rescue fund face opposition in Germany, while a Financial Times report said that a split had opened up within the currency bloc over the terms of Greece’s next bailout.

Japan’s Nikkei rose 0.2 percent, while MSCI’s broadest index of Asia Pacific shares outside Japan gained 0.1 percent. The tech sector was the best performer in the MSCI index, with the defensive telecoms and utilities sectors performing worst.

U.S. stocks rose a little more than 1 percent on Tuesday, with a sharp pullback late in the session from stronger gains underlining the fragility of sentiment. S&P 500 futures traded in Asia fell 0.5 percent, pointing to a weaker start on Wall Street later.

Turbulence on global markets since late July has been driven by investors’ twin fears of renewed recession in the United States and the chaos that Europe’s sovereign debt crisis could inflict on the financial system if it continues unchecked.

Expectations have risen among market economists that Greece will be forced soon to default on its massive debts, with uncertain consequences for both the exposed European banking sector and other struggling euro zone nations.

There is also concern that, while Europe’s rescue vehicle has been able to cope with bailing out Greece, Portugal and Ireland, its resources would be overwhelmed if a bigger nation such as Italy or Spain were to need help.