Global Markets: Yen extends fall, Asian shares edge higher on US fiscal hopes

Asian stocks

The yen hit its lowest level in more than two years on Friday, helping lift Japanese stocks to 21-month highs on expectations of drastic monetary easing, while shares in the rest of Asia inched higher on signs Washington is racing to avoid a fiscal crisis.

U.S. President Barack Obama and lawmakers are launching a last round of budget talks before a New Year's deadline to reach a deal or watch the economy go off a "fiscal cliff," that economists fear will push the United States back into recession and stamp out fragile signs of recovery elsewhere.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 percent. It has gained about 18.5 percent this year, a sharp turnaround from an 18 percent plunge in 2011.

Australian shares rose 0.6 percent to a 19-month high and were on track to post their strongest annual gain since 2009, with resources supported by rising iron ore prices. Hong Kong shares hovered near a 17-month high with a 0.2 percent gain and Shanghai shares rose 0.4 percent.

European shares were nearly flat overnight, and U.S. Stocks marked a fourth straight session of losses. Oil prices rose on hopes the United States would resolve the fiscal crunch of automatic tax hikes and spending cuts, easing concerns about weakening demand.

Brent crude had inched up 20 cents to $111 per barrel and on course to post a full- year increase of about 3.4 percent, which would be its smallest gain in four years. U.S. crude rose 0.5 percent to $91.28, set for its first yearly loss in four years.

"The U.S. fiscal cliff will continue to direct crude prices until they're resolved," said Natalie Rampono, a commodities analyst at ANZ in Melbourne.

As well as being deadline day for the fiscal cliff, Dec. 31 is the date the federal government is set to reach its $16.4 trillion debt limit. The Treasury will have to take measures to buy time for the government to approve a rise in the debt ceiling.

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