* MSCI Asia ex-Japan up 0.2 pct, Nikkei at 8-1/2-mth peak
* Yen stays pressured ahead of this week's BOJ meeting
* Fresh offers raise hopes US can deal with fiscal woes
* Oil, copper, gold rise on improving sentiment
* European shares likely to climb
TOKYO, Dec 18 (Reuters) - Asian shares and other risk assets
rose on Tuesday as signs of compromise sparked new optimism that
the U.S. "fiscal cliff" budget tussle could be settled before
tax hikes and spending cuts begin to bite early next year.
Differences over how to resolve the fiscal cliff narrowed
significantly Monday night as President Barack Obama made a
counter-offer to Republicans that included a major change in
position on tax hikes for the wealthy, according to a source
familiar with the talks.
The move, which the source stressed was not Obama's final
offer, was welcomed by a spokesman for Republican House of
Representatives Speaker John Boehner, potentially advancing
negotiations towards a deal by the end-year deadline.
Oil, copper and gold also firmed on the prospect of progress
in the U.S. budget talks, which reduced worries about economic
damage, but expectations of more monetary easing in Japan kept
the yen soft.
"The market will view any advance in talks as positive for
confidence, which has been battered by the daily flow of
political fighting," Ben Taylor, sales trader at CMC Markets
said in a report.
"Regardless of what is decided, the market is looking for a
decision and any compromise will help provide a clearer picture
for the future."
European shares were expected to keep up the positive
momentum, with financial spreadbetters predicting London's FTSE
100, Paris's CAC-40 and Frankfurt's DAX
will open as much as 0.5 percent higher. A 0.3 percent gain in
U.S. stock futures suggested a higher Wall Street
opening.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.2 percent, following a rise in global
shares on Monday. The index snapped an eight-day winning streak
on Monday as investors took profits from last week's rally.
Regional equities also took direction from local factors.
Australian shares gained 0.5 percent to a 17-month
high, with resource stocks elevated by a rise in iron ore prices to a five-month high.
"Iron ore is a very key commodity in the Chinese industrial
machine, steel usage will bounce back and that is good news for
our exporters," said Baillieu Holst director Richard Morrow.
Seoul shares rose marginally but underperformed some
others in Asia, as investors were reluctant to build positions
ahead of South Korea's presidential vote on Wednesday.
London copper was up 0.3 percent to $8,085 a tonne.
"Before the end of the year, I don't really see huge selling
pressure, with improving data from China and expectations for a
resolution to the fiscal cliff," said analyst Bonnie Liu of
Macquarie.
U.S. crude surged 0.8 percent to $87.85 a barrel and
Brent rose 0.7 percent to $108.41.
Spot gold added 0.3 percent to $1,702.01 an ounce.
Solid performance in stocks boosted Asian credit markets,
narrowing the spreads on the iTraxx Asia ex-Japan
investment-grade index by two basis points.
JAPAN POLITICS MATTER
In Japan, the Nikkei average closed up 1.0 percent
at an 8-1/2-month high and edged closer to the key 10,000-mark,
with sentiment bolstered by a landslide election win for the
conservative Liberal Democratic Party on Sunday.
LDP leader Shinzo Abe, due to be confirmed as Japan's
premier on Dec. 26, is calling for far more aggressive monetary
stimulus and huge public works spending to rescue Japan from
decades-long deflation. His pledges are seen as pressuring the
yen and supporting Japanese stocks by improving earnings for the
country's exporters.
"The Nikkei is up today primarily due to the rise in U.S.
stocks overnight, but the 'Abe-effect' is surprisingly
longer-lasting as investors seem to be postponing the timing of
unwinding their positions until they see the details and
specifics in policies," said Ayako Sera, market economist at
Sumitomo Mitsui Trust Bank.
The dollar inched up 0.1 percent to 83.96 yen, off a
20-month high of 84.48 yen hit on Monday but well above its late
New York levels on Friday.
Abe applied fresh pressure on the Bank of Japan on Monday,
saying that the election result reflected strong public support
for his views, which he hoped the BOJ would take into account at
its two-day policy meeting starting on Wednesday.
"The dollar has more upside against the yen ahead of the
BOJ's meeting, with expectations for some additional easing
steps being strengthened after Abe's comments yesterday," said
Yuji Saito, director of foreign exchange at Credit Agricole in
Tokyo.
"The corrective fall in the dollar/yen after the election
was small and it's crawling up because the yen weakening trend
is still intact. But after the BOJ meeting, there will likely be
pre-holiday profit-taking, pushing the dollar/yen down by 1 to 2
yen," Saito said, adding that the dollar could temporarily touch
85 yen before profit-taking sets in by year-end.
Concerns that big-scale fiscal stimulus could seriously
increase the country's debt burden pushed the benchmark 10-year
Japanese government bond yield to a one-month
high of 0.750 percent.
U.S. Treasury yields also inched up in Asia, with the
10-year yields briefly reaching 1.796 percent, its
highest level since Oct. 26, on hopes for a deal on the U.S.
fiscal cliff. [US/T