TOKYO Asian shares edged up on Friday on expectations a deal will eventually be reached to avoid a U.S. fiscal crisis, but investors wary about taking big positions before the year-end were likely to take profits on the rises and buy on dips.
Investors will also be looking at data from Asia on Friday and Saturday for signs that global growth deterioration may be slowing down.
Japan's industrial output unexpectedly rose 1.8 percent in October, up for the first time in four months, government data showed on Friday, suggesting the impact of the global slowdown and a diplomatic row with China may have run their course.
Later on Friday, India will report its third-quarter gross domestic product at 0530 GMT and China will release the official manufacturing PMI for November on Saturday.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent on Friday, after rising 1.1 percent to close at its highest level in nearly nine months on Thursday.
Australian shares gained 0.5 percent to a fresh three-week high, helped by firmer base metals prices and a higher close on Wall Street.
South Korean shares .KS11 were down 0.1 percent.
"Concerns about the fiscal cliff linger, but investors still expect a budget deal to be reached by the end of this year. Today's shares will fare well," Lee Jeong-do, an analyst at Shinhan Investment Corp said of Seoul shares.
Japan's Nikkei stock average .N225 opened 0.5 percent higher, tracking higher global shares overnight and also drawing support from an ongoing weak yen.
The dollar was steady against the yen at 82.13, not very far from a 7-1/2-month high of 82.84 yen hit last week.
"The market's mood is still positive, but the index has reached a level where investors want to take a break until there are more signs that these issues will be resolved," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
Miura added that Japanese investors may become sellers when the Nikkei reaches the 9,500-mark, while foreigners may chase the market higher.
U.S. fiscal cliff: link.reuters.com/dut83t
Asset returns in 2012: link.reuters.com/nyw85s
Euro zone debt crisis: r.reuters.com/hyb65p
Financial markets swung around on Thursday after comments by U.S. lawmakers dampened optimism that an agreement would be reached to avoid a series of tax hikes and spending cuts which could put the world's biggest economy back into recession.
The pan-European FTSEurofirst 300 index .FTEU3 ended up 1.1 percent on Thursday, its highest closing level since July 2011. The index, led by mining stocks, rose on growing optimism a deal will be reached to avoid growth-sapping austerity action.
U.S. stocks and the euro rose but remained pressured as the speaker of the U.S. House of Representatives, John Boehner, indicated no substantive progress in the last two weeks in talks to reach a U.S. budget deal. Less than 24 hours earlier, the Republican said he was "optimistic" about reaching a deal.
Democratic Senate Majority Leader Harry Reid struck back, saying later his party was still waiting for a reasonable proposal from Republicans.
The European Commission's monthly business and consumer survey showed on Thursday euro zone economic morale improved for the first time in almost a year in November, with Germany and France gaining strongly, but industry's reluctance to invest next year bodes poorly for a quick recovery from recession.
The euro steadied around $1.2974 after peaking at $1.3015 on Thursday, its highest level since October 31. After global lenders earlier in the week agreed to unblock more aid to debt-stricken Greece, borrowing concerns for other indebted countries such as Spain and Italy eased substantially.
Italy's 10-year bond yield hit its lowest in two years at an auction on Thursday.
In the U.S., the government said on Thursday third-quarter gross domestic product expanded at a 2.7 percent annual rate for its fastest pace since late 2011 and much quicker than the 2 percent rate the government estimated last month, with export growth helping to offset the weakest consumer spending and first drop in business investment in more than a year.
U.S. crude futures fell 0.5 percent to $87.64 a barrel, after they rose the previous day on optimism over the U.S. budget talks and escalating violence and political tension in Syria and Egypt which stoked fear of oil supply disruptions.
(Additional reporting by Hyunjoo Jin in Seoul and Ayai Tomisawa in Tokyo; Editing by Michael Perry)