Asian shares rose on Thursday and the euro edged back towards the previous session's high on reports that the European Central Bank will buy unlimited amounts of short-term sovereign bonds to cap surging borrowing costs in indebted euro zone states.
The single currency jumped more than 1 cent on Wednesday to a high of $1.2625 after a string of leaks from euro zone officials raised expectations that the ECB will unveil a bond intervention plan after Thursday's policy meeting.
"This meeting is absolutely crucial, because expectations are extremely high. If the ECB does not deliver, we will get into another bad patch," said Gilles Moec, senior European economist at Deutsche Bank.
The euro firmed around 0.1 percent to about $1.2617 on Thursday, while the dollar eased by a similar percentage against a basket of major currencies <.DXY>.
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.6 percent, while Japan's Nikkei <.N225> was flat. <.T>
Australia's stock market <.AXJO> led regional gains, rising nearly 1 percent after a jump in copper prices in the previous session boosted mining heavyweights Rio Tinto and BHP Billiton .
U.S. stocks had largely ignored the European news on Wednesday, with the Dow Jones Industrial Average <.DJI> gaining 0.1 percent but the broader S&P 500 <.SPX> easing 0.1 percent, hurt by a profit warning from economic bellwether FedEx Corp . <.N>
"While FedEx is only one company, it's one whose warning is indicative of the global economic slowdown we're dealing with," said Leo Grohowski, chief information officer at BNY Mellon Wealth Management in New York.
But S&P index futures traded in Asia rose 0.3 percent on Thursday, suggesting modest gains on Wall Street later as long as ECB President Mario Draghi does not disappoint investors at his 1230 GMT news conference.
ECB FACES CRUCIAL MOMENT
Renewed ECB intervention in the euro zone's bond markets is seen by most market economists as crucial for buying governments time to come up with a longer-term response to the bloc's debt crisis.
The ECB said in August it would start buying Spanish and Italian government bonds again to ease pressure on those countries' borrowing costs, but only if they first sought help from the euro zone's rescue fund and met strict conditions.
Further details will be revealed later on Thursday, with sources telling Reuters on Wednesday the central bank was ready to waive seniority status - the right to be paid back first - on government bonds it buys under a new program.
That should encourage private investors wary of being pushed down the creditor pecking order by central bank interventions.
Sovereign bond markets welcomed the reports on Wednesday. Spanish and Italian 10-year yields fell 20 basis points and 16bp respectively to 6.42 percent and 5.51 percent.
Oil was boosted by expectations that ECB action will support asset prices, with U.S. crude climbing 0.7 percent to just above $96 a barrel on Thursday and Brent crude gaining 0.5 percent to around $113.70.
Gold edged back near its highest in almost six months, gaining around 0.2 percent to about $1,696.75 an ounce.
(Additional reporting by Ian Chua in Sydney, Eva Kuehnen in Frankfurt and Ryan Vlastelica in New York; Editing by Kim Coghill)