* Euro makes thin gains ahead of Portugal debt auction
* Asia stocks flat to slightly higher
* Gold stronger on euro zone fears, Lunar New Year demand
By Nick Macfie
SINGAPORE, Jan 12 (Reuters) - The euro rose weakly against
the dollar on Wednesday while Asian stocks edged higher, but
investors were increasingly nervous ahead of a key bond sale
by ailing euro zone member Portugal later in the day.
Eyes are on Lisbon's first debt auction of the year, when
it is due to tap bond investors for around 1.5 billion euros,
while Spain is seeking up to 3 billion euros on Thursday.
Markets are keen to see if they will be able to fund
themselves at a sustainable cost or be forced to turn to the
European Union and IMF for financial aid.
But 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. []
This followed Japan's promise to support an upcoming euro
zone bond sale and talk that the European Central Bank bought
debt to help stabilise markets.
The euro was trading around $1.2986 to the dollar.
On Monday, the euro plumbed a four-month trough around $1.2871.
"The Portuguese (debt) auction will probably go quite well
and that'll likely give the euro a bump up ... temporarily,"
said Joseph Capurso, a strategist at Commonwealth Bank, late
on Tuesday.
"The bottom line is they're going to be paying something
like 7 percent on their 10-year debt and that's probably more
than they can afford. There is a very high chance they'll have
to seek some sort of assistance from European partners and
that'll push the euro back down again."
Asian shares were flat to slightly higher on the back of
gains on Wall Street and solid U.S. earnings reports, with
Tokyo's benchmark Nikkei index up 0.15 percent. The
MSCI index of Asia Pacific stocks ex-Japan was
up 0.52 percent.
The Dow Jones industrial average rose 0.3 percent
on Tuesday, and the Standard & Poor's 500 Index added
0.4 percent. The Nasdaq Composite Index gained 0.3
percent.
Brent crude prices <LCOc1> stayed near $98, the highest
level since October 2008, as production shutdowns in Norway
and Alaska raised expectations of an accelerated tightening of
supplies in Atlantic basin, Middle East and Asia-Pacific oil
markets.
Gold rose more than $4 to $1,384.80 an ounce, below
its historical high of around $1,430 struck in December but
still buoyed by high oil prices and the euro zone crisis, both
of which help promote gold's image as a safe haven.
Dealers said gold could rise further as demand from
jewellers and investors picks up in India and China, leading
to tighter stocks for gold bars in Singapore and Hong Kong.
Premiums for gold bars are at two-year highs.
Worries about inflation in China, the world's
second-largest gold consumer after India, drove investors to
gold, while purchases from jewellers are also rising ahead of
the Lunar New Year in February , a traditional period
for giving gifts.
(Editing by Kim Coghill)
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