TOKYO (Reuters) - Asian shares got off to a promising start on Tuesday on the back of rising U.S. manufacturing output and a jump in euro zone business activity, ahead of a key U.S. Federal Reserve policy decision later this week
Investors are on tenterhooks over when the Fed will start to reduce its $85 billion-a-month bond-buying program, a major driver of global risk assets in recent years.
A majority of economists expect the taper to happen in March, but a recent run of upbeat economic data has steadily raised the odds for an announcement at this week's two-day meeting concluding on Wednesday, or in January.
"Although we have heavier odds pinned on the tapering being announced in January, we think the economic case has already been made for pulling the trigger," analysts at Societe Generale wrote in a note.
"The only reason to delay would be to give the FOMC the opportunity to strongly signal its intent to taper in January. In either case -- actual taper or signal of impending taper -- we expect the 10-year U.S. Treasury yield to test 2.9 percent and the curve to bear steepen."
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.1 percent after hitting a three-month intraday low in the previous session.
In Tokyo, Nikkei futures advanced 0.8 percent, indicating a firmer open after shedding 1.6 percent to a 3-1/2 week closing low on Monday.
Overnight, U.S. stocks rose, having posted their worst week since August on Friday, after manufacturing output increased for a fourth straight month in November, suggesting the economy is gaining momentum. [ID:nL2N0JV0NW] U.S. S&P E-mini futures dipped 0.1 percent in early Asian trade on Tuesday.
Yields on benchmark 10-year U.S. Treasuries ended 11 basis points higher at 2.8793 percent on Monday, not far from a three-month high of 2.932 percent set on December 6.
The pick-up in euro zone business activity boosted the common currency. It stood at $1.3761, having risen to as high as $1.3800 in the previous session, within sight of a seven-week high of $1.3811 reached last week.
The dollar pulled back further against the yen from a five-year high set on Friday. The greenback was at 103.08 yen after easing 0.3 percent on Monday.
Ahead of the Reserve Bank of Australia policy meeting minutes, the Australian dollar was down a tad at$0.8944, near a 3-1/2 month low of $0.8909 set on Friday.
Among commodities, U.S. crude prices eased 0.2 percent to about $97.25 a barrel, giving up some of the previous session's 0.7 percent rise.
Gold took a pause after rising for two straight days. It stood at around $1,240 an ounce on Tuesday morning.