Global markets trade firm

The Nikkei average ended flat on Wednesday, backing away from an eight-month high hit early as traders locked in profits, but sentiment remains strong as upbeat US earnings and a softer yen spurred foreign investors to buy up financial and property shares.

Earnings reports from US companies beat expectations, bolstering hopes that the world's No.1 economy is on a sustainable recovery path.

The Nikkei, while sharply underperforming other major indexes in 2010, has added 15 per cent since the start of November, with foreign investors net buyers of Tokyo stocks in the week to January 1 for a ninth straight week, and ended the most active trading day of the new year up 0.02 per cent or 2.12 points at 10,512.80, after rising early in the session to 10,576.51, its highest intraday level since May 13, 2010.

Banks and property shares led the advance, as foreign funds continued adding underweight financial stocks to their portfolios and property shares were in favor due to the Bank of Japan's asset buying scheme.

On the back of positive US earnings results, other Asian markets saw a relatively flat ending, albeit with a positive bias.

The Shanghai Composite closed up 0.6% at 2,821, and the Hang Seng was up 1.5% at 24,126.

The Straits Times closed flat at 3,247, while the Seoul Composite at 2,095 and Taiwan Weighted at 8,965 both closed up marginally at 0.3% and 0.4% respectively.

Even the European markets were trading firm at 2:25 pm, as the euro rose weakly against the dollar on Wednesday while Asian stocks edged higher.

However, investors were increasingly nervous ahead of a key bond sale by ailing euro zone member Portugal later in the day.

The common currency still enjoyed some reprieve after euro zone sources said the region's finance ministers were likely next week to consider the option of raising the effective lending capacity of the currency bloc's rescue fund as part of efforts to calm jittery markets.

France's CAC 40 was up 1.3% at 3,911, the DAX was up 1.1% at 7,019 and the FTSE 100 was at 6,047 up 0.5%