Asian shares edged higher on Tuesday, taking solace from Wall Street gains and some stability in recently weak crude oil prices, though gains were capped by caution ahead of this week's holidays. Financial spreadbetters at IG expected Britain's FTSE 100 .FTSE to open 0.4 percent higher. Germany's DAX .GDAXI was seen 0.6 percent higher, while France's CAC 40 .FCHI was seen gaining 0.6 percent. "While European markets were able to post gains last week, they still remain well below the levels that we saw at the beginning of the month which means any prospect of a Santa rally at this point is about as likely as getting a white Christmas," Michael Hewson, chief analyst at CMC Markets in London, said in a note to clients. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was 0.4 percent higher in afternoon trade, after Wall Street logged solid gains overnight. Australia's S&P/ASX 200 index added 0.2 percent. China's CSI300 index .CSI300 was slightly higher, erasing earlier losses, while the Shanghai Composite .SSEC was off its lows and down 0.1 percent after the previous day's rally. Japan's Nikkei stock index .N225 ended down 0.2 percent, though above its early session lows. "The mood will likely depend on moving oil prices for now," said Yutaka Miura, a senior technical analyst at Mizuho Securities in Tokyo. U.S. and most European markets will close on Friday for Christmas. While Christmas is not a public holiday in Japan, markets will be closed on Wednesday to observe the emperor's birthday. U.S. crude futures CLc1 extended early gains and added about 0.9 percent to $36.14 a barrel, pulling above a 2009 low of $33.98 hit in the previous session. Brent crude oil futures LCOc1 added 0.7 percent to $36.62 after skidding to $36.04 on Monday, their lowest since July 2004, as demand for heating oil slipped on warmer-than-normal temperatures. In addition to a supply glut, crude prices have weakened in line with the dollar's appreciation ahead of the U.S. Federal Reserve's widely anticipated interest rate hike earlier this month. Oil is priced in dollars, so any rise in the greenback makes it more expensive for buyers holding other currencies. "The price of oil could fall below $30 a barrel but we do not see much weakness beyond that, and by the end of the year we expect prices to settle closer to $40," said Kathy Lien, managing director of FX strategy for BK Asset Management in New York, adding, "when the dollar peaks, commodities will bottom." In the long run, she said in a note to clients, "China's focus on domestic demand should be positive for energy prices." The dollar index .DXY, which tracks the greenback against a basket of six rival currencies, edged up about 0.1 percent to 98.485, but remained below a two-week high of 99.294 marked on Thursday. The dollar added about 0.1 percent to 121.25 yen JPY=EBS, while the euro was slightly down from late North American levels at $1.0908. The euro rose on short covering on Monday following a weekend election in Spain, even after no party won a clear mandate in the euro zone's fourth biggest economy. Spot gold XAU= took a breather from its recent gains and was steady at $1,077.98 an ounce after rising 1.2 percent on Monday and 1.4 percent on Friday as investors covered short positions ahead of the holidays.
