Asian shares and the euro inched up on Wednesday after European officials agreed to strengthen a bailout fund and seek more aid from the International Monetary Fund to help lend to troubled economies as Italy's borrowing costs hit fresh highs.
MSCI's broadest index of Asia Pacific shares outside Japan was up 0.14% after a two-day rally on hopes for more progress in the euro zone debt crisis. But Japan's Nikkei fell 0.8%, also after rising for two days in a row.
The euro also rose 0.1% to $1.3330, but still well below Tuesday's high of $1.3443.
Euro zone officials agreed on Tuesday on two ways to leverage the firepower of their bailout fund, the 440-billion-euro European Financial Stability Facility (EFSF), using both an insurance scheme and a co-investment programme. They also agreed to extend further aid payments to Greece and Ireland.
Hopes rose for more involvement from the IMF after Eurogroup President Jean-Claude Juncker said they have agreed to rapidly explore ways of boosting the IMF's resources through bilateral loans so it can match the leveraged EFSF's capabilities.
Italy, which faces a dire funding situation with its skyrocketing borrowing costs, has had preliminary discussions with the IMF about financial support to cope with the euro zone's debt crisis, but no decision has been taken, several sources close to the situation said.
"Market reaction is muted as details about the EFSF were no surprise, the focus remains on who will give money, to which no fresh news was provided," said Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo.
"In the end, whether the European Central Bank will become more actively involved in the debt crisis is key as it is the only viable lender. All other developments are mere technicals."
US stocks rallied on Tuesday on euro zone hopes as well as a report from the Conference Board, an industry group, which showed consumer confidence bounced back in November from a 2-1/2-year low in another sign the US economy remains on a recovery path.
Italy was forced pay a record 7.89% yield for its 3-year bonds on Tuesday, above levels which Greece, Ireland and Portugal were forced to apply for international bailouts, but European and US stocks rose in apparent relief at the strong demand, with the maximum 7.5 billion euros sold.
Reflecting a lack of incentives to take risks, Asian credit markets were subdued, with spreads on the iTraxx Asia ex-Japan investment grade index widening slightly early on Wednesday.