* Euro bounces back, China offers words of support
* Stocks firm; Nikkei up 1.5 pct on bargain buying after dip
* Crude firm for third straight session as cold weather
bites
SINGAPORE, Dec 21 (Reuters) - The euro bounced back on
Tuesday from a day-earlier selloff over euro debt woes
following words of support from China, while stocks were firm
across Asia as investors picked up end-of-year bargains.
Japan's Nikkei average closed at a seven-month high.
Cold weather in Europe kept crude prices firm for a third
straight session, driving energy-related stocks to be the
biggest gainers in the MSCI Asia ex-Japan share index. U.S.
Treasuries held steady, sticking to narrow price ranges.
Comments from Chinese Vice Premier Wang Qishan that China
supports the measures taken by the European Union and the
International Monetary Fund to calm global markets in the face
of the euro zone's debt crisis prompted a short-covering rally
in the euro currency.
"We hope the measures can achieve some results as soon as
possible," Wang told EU trade and economic officials who were
visiting China.
Still, China, which has invested an undisclosed portion of
its $2.65 trillion in reserves in the euro, also urged
European authorities to back their tough talk on debt with
action. []
The euro rose to $1.3194 after Wang's comments,
rising a full cent from a two-week low hit on Monday, when
investors fled from the currency fearing more credit ratings
downgrades in Europe.
Euro dropped on Monday as far as $1.3094 and hit a record
low against the Australian dollar and the Swiss franc as
investors fretted about further credit ratings downgrades in
Europe.
The firmer tone of the currency also lifted it away form
the record lows it struck on Monday against the Australian
dollar and the Swiss franc.
Still, investors suspected the rise in the euro was simply
a temporary reprieve for a currency that has dropped more than
6 percent against the dollar since hitting a 10-month high in
early November.
"I still think the euro faces downside risks," said Koji
Fukaya, chief FX strategist at Credit Suisse. "The market will
probably test the downside towards April, when Spain will have
big redemptions of bonds."
Stock investors looked beyond the euro zone risks for now
to pick up stock ahead of the end of the year.
Japan's Nikkei share average rose 1.5 percent for
its highest close since May as investors rooted out bargains
following two straight days of declines. []
Major electronics maker Sony Corp gained 2.7
percent, construction machinery maker Komatsu Ltd
climbed 1.5 percent and Mitsubishi Motors Corp added
2.5 percent.
"Investors are buying on dips, pushing the Nikkei higher
after yesterday's losses," said Takashi Ohba, a senior
strategist at Okasan Securities.
"The Nikkei was flat last week and traders waited for any
positive factors to trade on -- they got a good opportunity
today so the market is posting solid gains," Ohba said.
A decision by the Bank of Japan to leave policy unchanged
was fully factored into markets. []
The MSCI index of stocks elsewhere in Asia
rose 1 percent on the day to stand more than 12 percent higher
this year.
Hong Kong and Shanghai stocks rose off the
back of firmer coal shares on expectations of more demand
heading into the winter season.
China Shenhua Energy firmed close to 5 percent
and China's Sinopec was up 1.4 percent. In Japan,
the country's top refiner JX Holdings gained 1.9
percent.
Firmer metals prices pushed miners higher in Australia, to
leave the main S&P/ASX 200 index up 0.8 percent. Seoul
shares hit a three-year high as tensions on the
peninsula eased as North Korea stepped back from a
confrontation over what it called South Korea's "reckless"
military drills.
Snow and freezing temperatures grounded flights and
disrupted travel across northern Europe on Monday, pushing oil
prices higher in Asia on Tuesday for a third straight session.
NYMEX February crude futures <CLc1> rose 0.4 percent to as
high as $89.77 per barrel and heating oil and gas oil also
gained.
Gold edged higher to $1,385.90 per ounce . U.S.
10-year bonds fell 2/32 in price in Asia to yield
3.3445 percent, little changed from late New York trade.
(Additional reporting by Asia bureaus)
