* MSCI Asia ex-Japan inches up 0.2 pct
* US set for last-minute scramble to avert "fiscal cliff"
* Nikkei hits 21-month high as yen slips to two-year low vs
* European shares likely reopen from holidays with a drop
TOKYO, Dec 27 (Reuters) - Asian shares rose on Thursday amid
caution as U.S. lawmakers prepared to resume negotiations to
avoid a fiscal crunch by Dec. 31, while the yen hit a 21-month
low against the dollar on the prospect of drastic monetary
easing and massive state spending.
European shares were seen returning from the Christmas
holiday break with a fall, financial spreadbetters predicting
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX would open down as much as 0.6 percent.
A 0.1 percent gain in U.S. stock futures suggested a
firm Wall Street start.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.3 percent, with Australian shares
also adding 0.3 percent. Hong Kong shares rose
0.4 percent to a near 17-month high, although Shanghai
steadied after earlier touching their highest level since July.
In a sign that there may be a way to break the deadlock in
the U.S. Congress, Republican House of Representatives Speaker
John Boehner urged the Democrat-controlled Senate to act to pull
back from the cliff and offered to at least consider any bill
the upper chamber produced.
U.S. President Barack Obama will try to revive budget crisis
talks which stalled last week when he returns to Washington on
Thursday after cutting short his Christmas holiday in Hawaii.
"There is no easy way to resolve the U.S. fiscal cliff, but
there should be a compromise at some point and that's what the
market is looking for," said Tetsu Emori, a commodity fund
manager at Astmax in Tokyo.
Economists warn that the "fiscal cliff" of higher taxes and
spending cuts worth $600 billion could hurl the world's largest
economy into recession, dragging other economies with it.
Such concerns underpinned the dollar as the fiscal impasse
continues to sap investor appetite for risky assets, raising the
dollar's safe-haven appeal.
"Most risk assets will probably remain range-bound until we
get a clearer indication of what to expect from the fiscal cliff
negotiations," said Stan Shamu, a strategist at IG Markets.
There were some signs of economic improvement in the Asian
region, with data showing profits earned by China's industrial
companies jumped 22.8 percent in November from a year earlier,
accelerating from October's 20.5 percent.
London copper rose 1.7 percent to a one-week high of
$7,932 a tonne on the positive data from China, the world's top
U.S. crude futures inched up 0.2 percent to $91.14 a
barrel on hopes the new Japanese government's policies would
spur demand. Brent crude steadied at $111.03.
However, South Korea warned on Thursday of only a modest
recovery in the economy next year. India's economic growth could
get stuck at 5-5.5 percent if a policy logjam continues, said
Montek Singh Ahluwalia, a key policy adviser to Prime Minister
YEN SALES ACCELERATE
Against the yen, the dollar at 85.87 yen reached its
highest since September 2010, with investors accelerating their
yen sales after new Japanese Prime Minister Shinzo Abe said his
government would pursue bold monetary policy, flexible fiscal
policy and a growth strategy to encourage private investment.
Abe has pledged to make his top priority beating deflation
and taming the strong yen, which are dragging down the world's
third biggest economy.
The yen is on track for a drop of more than 10 percent this
year, its steepest since 2005. It also fell to a 16-month low
against the euro at 113.65 yen on EBS on Thursday.
The weaker yen, a boon for Japanese exporters, lifted the
benchmark Nikkei stock average 0.9 percent to close at
its highest since March 2011. It is on track to log its best
yearly gain since 2005.
"People are putting on some positions based on what we saw
after the cabinet appointment and LDP policy decision," a dealer
at a foreign brokerage said, referring to the ruling party.
The yen is expected to stay under pressure given the new
government's clear resolve to prevent it rising. Japan's top
government spokesman said recent yen declines were a reversal of
past "one-sided" gains in the Japanese currency.
"I'm still bullish on the dollar/yen quite a bit," said a
trader for a U.S. bank in Singapore. "In this thin market, I
think anything can happen. But definitely I wouldn't go against
the trend. The trend is quite clear at this point in time."
New Japanese Finance Minister Taro Aso said the prime
minister had ordered him to compile a stimulus package without
adhering to the previous government's 44 trillion yen ($519
billion) cap on new bond issuance.
The benchmark 10-year Japanese government bond yield
rose to three-month highs of 0.80 percent, while
lead 10-year JGB futures hit a three-month low of