Asia stocks edge up as risk aversion wanes, euro languishes

Asian stocks edged up on Wednesday as risk aversion triggered by recent geopolitical tensions continued to ebb, while the euro languished near eight-month lows.

Violence continued in Gaza, but hopes rose for an easing of tension in Ukraine after pro-Russian rebels handed the flight recorder and victims' remains from a downed Malaysian airliner to international authorities.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1%, lifted after the S&P 500 hit a new high overnight as risk markets turned their attention to positive corporate earnings and economic data.

Tokyo's Nikkei climbed 0.2%.

In currencies the euro stood little changed at $1.3467, close to the $1.3459 struck overnight.

The weaker euro dovetailed nicely with expectations for the European Central Bank to ease policy further with a gradual widening of interest rate differentials favouring the U.S. over Europe seen unfolding.

Still, market participants did not see a clear, specific trigger for the latest plunge.

"The only explanation for the sell-off in EUR/USD is a technical one. The currency pair has been in a downtrend and hovering near 1.35 for the past few days with speculators itching to test this key support level," Kathy Lien, Managing Director of FX Strategy for BK Asset Management, wrote in a note to clients.

"In the long run, we believe EUR/USD should be trading comfortably below 1.35, but not until there is significant upside momentum in U.S. yields," she said.

U.S. Treasury yields fell overnight after benign U.S. inflation data suggested less pressure on the Federal Reserve to raise interest rates sooner than expected.

The dollar was nearly flat at 101.48 yen, having pulled back from the week's low of 101.19 hit on Monday as demand for the safe-haven Japanese currency diminished.

For the Australian dollar, which gained Tuesday after the country's central bank chief chose not to talk down the currency, focus was on domestic inflation data due at 0130 GMT.

An upside surprise is likely to trigger a bigger market reaction given futures markets have priced in a 36% chance of an interest rate cut by year-end.

In commodities, gold held steady after falling on Tuesday after tensions over the Malaysian airliner downed over Ukraine eased.

Spot gold was little changed at $1,307 an ounce after going as low as $1,301 overnight. It had climbed to as high as $1,324 late last week when the Malaysian airliner was brought down.