Asian shares firmed to end their best first quarter in over 20 years on Friday, while European shares were also expected to rise, returning to a new year rally ahead of a meeting that may boost the euro zone's bailout resources.
Financial spreadbetters predicted major European markets would open up 0.6 to 0.9% after three days of losses which have knocked almost 3% off shares.
U.S. stock futures inched up 0.2%, suggesting a continuation of positive mood late in the previous session.
MSCI's broadest index of Asia Pacific shares outside Japan eked out a 0.3% gain, in positive territory after a two-day decline, but still off a one-week high hit earlier this week.
The Asian index is set for a quarterly gain of nearly 12%, the best showing since the third quarter of 2010 and best first quarter in 21 years, reflecting moves to ease Europe's debt crisis and hopes over the pace of U.S. and global growth.
Japan's Nikkei average slipped 0.3%, retreating from Thursday's one-year high, but is up more than 19% and set for its best first quarter in 24 years.
Sentiment across asset classes has turned bearish since mid-March, however, due to fears of a slowdown in growth centred around China, and the conviction that a huge injection of central bank money was only a panacea for Europe's debt troubles.
Euro zone finance ministers meeting in Copenhagen on Friday are likely to agree to almost double their financial backstops temporarily in a move that should help Italy and Spain, although Germany favours a smaller increase.
CHINA RISK
With financial markets starting to price in concerns about a slowdown in China, official China manufacturing PMI for March due on Sunday presents the next risk to assets with close links to Chinese growth, such as the Australian dollar, analysts at Barclays Capital said.
Escalating growth worries put the Shanghai Composite Index on course for its worst month since last September, weighed by underwhelming 2011 corporate earnings which raised fears of corporate profitability getting hit more than expected.
According to Thomson Reuters StarMine, of the 64% of Chinese companies that have reported earnings so far, 74% have missed expectations.
Chinese fund managers slashed their suggested equity weightings in March to the lowest level in 21 months, a Reuters poll showed on Friday.
Quarter-end repatriation flows drove up such riskier assets as the Australian dollar and the euro.
The euro was up 0.4% to $1.3354, up from its lowest level in three sessions of $1.3251 hit on Thursday when concerns about slow progress in debt-cutting efforts in the euro zone's large and indebted countries undermined the currency.
The Aussie also inched up 0.3% to $1.0403.
Analysts said concerns about slowdowns in China and challenges facing the euro zone fiscal reforms were a done-deal and whether the U.S. economy remains on a recovery course to maintain yield differentials is a far more significant factor for market trends in the second quarter.
The degree of commitments to accommodative policy from the United States and Japan will determine the dollar/yen, which Amikura expects to trade between 80-85 yen in April-June.
As risk aversion trades return, the structure of currency flows into Europe is undergoing significant changes, Morgan Stanley said in a research note.
OIL REBOUNDS
Traders took the opportunity to cover short positions and bought on price dips after oil tumbled in the past two sessions on growing talks of a release of strategic petroleum reserves by some consumer nations and a surge in U.S. crude inventories.
Brent crude was up 0.2% to $122.68 a barrel after settling down $1.77 on Thursday. U.S. crude futures rose 0.5% to $103.34 a barrel on Friday after losing $2.63 the day before.
