* MSCI Asia ex-Japan up 1 percent; Australia and China lead
* Nikkei ends up 2.1 pct at fresh 4-1/2-year highs
* Aussie dollar and oil gain, gold capped
* European shares likely inch lower
By Chikako Mogi
TOKYO, March 6 Asian shares extended gains on Wednesday while U.S. Treasuries and gold were capped as Wall Street's record close spurred a shift into riskier assets amid signs of a continuing U.S. economic recovery and globally accommodative monetary conditions.
European markets are seen easing from a rally, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX would open down as much as 0.2 percent. A 0.1 percent rise in U.S. stock futures pointed to a steady Wall Street start.
Following a record high close in the Dow Jones industrial average overnight, the MSCI's broadest index of Asia-Pacific shares outside Japan gained 1 percent, adding to Tuesday's 1.3 percent surge. The index tumbled to a nine-week low on Monday.
Resources-reliant Australian shares and Chinese shares were among the top performers, encouraged by Tuesday's data showing the huge U.S. services sector grew in February at its fastest pace in a year and China announcing record public spending in 2013. Both factors boosted hopes of economic growth and demand for goods.
"The Chinese announcement at the start of its annual parliament meetings stamped out any extremely bearish bias as the message was that China will support growth but will not tolerate upside risks such as the housing sector," said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory in Tokyo.
"It also removed one of the political uncertainties which investors worried would dampen growth momentum, spurring short covering, particularly in base metals," he said.
London copper held steady around $7,772 a tonne.
Australian stocks rallied 0.8 percent to a 4-1/2-year high as data showing the economy last quarter grew faster than its peers in the rich world in a 21-year run of expansion boosted sentiment.
Commodity-linked currencies, often related to risk appetite, firmed, with the Australian dollar rising 0.2 percent to $1.0291, above an eight-month low of $1.0116 plumbed on Monday.
Hong Kong and Shanghai shares rose 1 percent respectively.
"Part of today's risk-on mode has to do with overnight U.S. gains, but there are also several sector moves driven by news flow coming out of the ongoing National People's Congress, which could keep markets choppy ahead," said Larry Jiang, chief strategist at Guotai Junan International Securities.
The dollar inched down 0.1 percent against a basket of key currencies.
U.S. crude rose 0.2 percent to $91.03 a barrel and Brent rose 0.3 percent to $111.91. Brent's front-month contract for April delivery rose late on Tuesday following news of Venezuelan President Hugo Chavez's death.
Niimura said the exit of Chavez from Venezuela's political scene would normally put downward pressures on oil prices, as the risk of manipulation such as controlling prices or supplies under Chavez's dictatorship dissipates with his passing.
Japan's Nikkei stock average closed 2.1 percent higher at a fresh 4-1/2-year peak.
BUBBLY OR NOT
Despite the increasingly positive mood, there are still some areas of concern, namely the Chinese government's move to dampen the country's overheated property market, a possible economic impact from the U.S. "sequestration" spending cuts, and last month's election deadlock in Italy.
But these worries have been eclipsed by a belief that major central banks stand ready to provide funding and monetary policy support to sustain the fragile recovery trend worldwide.
"That's fantastic testament to the power of easy money, in the face of doubts about the U.S. economy now that fiscal spending is being cut back," said Kit Juckes, strategist at Societe Generale. "Not to mention the power of easy money to overcome political uncertainty in Italy and recession throughout Europe."
The Bank of Japan, the Bank of England and the European Central Bank all hold their policy meetings on Thursday.
The euro held steady around $1.3058. The dollar was down 0.2 percent against the yen at 93.08 yen.
Barclays Capital said in a note that despite the Dow's stellar performance overnight, implied volatility, the credit markets, and earnings imbalances are not yet flashing warning signs unlike in 2007 prior to the financial crisis.
"Still, while Fed policy can move stock prices, it cannot overcome fundamentals by itself and valuation metrics are not a compelling reason to be long stocks at current levels. We will be watching other asset classes closely for signs the 'reach for yield' is creating macroeconomic risks but believe we are some way from that point," it said.
Gold traded in a narrow range and hovered around $1,575 an ounce, as investors turned their back on assets perceived as relatively safe.
Ten-year Treasury yields inched up 1 basis point in Asia to 1.903 percent, keeping the yield near the top end of its 1.912 percent to 1.827 percent range seen over the past week.
Growing appetite for risk assets helped Asian credit markets, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by three basis points.