HONG KONG: Asian shares rose on Thursday as strong corporate profits from US bellwethers allayed fears of a slowdown in earnings, particularly for the beleaguered tech sector, while the euro steadied after overnight weakness.

Data showing groundbreaking on new US homes rose in June to its fastest pace in over three years also supported the market, after a series of recent reports had pointed to worrying signs that the economy was cooling.

The MSCI Asia Pacific ex-Japan index was up 1.6 per cent by midday.

Korea's KOSPI bounced nearly 2 per cent despite a drop in banking shares that were hit by news that local banks were being probed by authorities investigating how a key interest rate has been set.

Japan's Nikkei was up 1 per cent but off its highs as market players worried that a firmer yen would pressure exporters such as car makers and electronics manufacturers.

On Wall Street, the S&P 500 hit its highest level since early May, helped by quarterly numbers from bellwethers such as Intel Corp and Honeywell and housing starts data that came in better than expected.

“It seems like market players were expecting very negative figures from Intel. Guidance from Intel was weak but was not shocking, so there is some short-covering now,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“But when all the short-covering will be done, the market will likely be capped... Bond yields are falling to historic levels in many countries, which show the bond markets have a very severe view on the global economy,” he added.

Shares of Samsung Electronics were up 3.6 per cent.

The Taiwan semiconductor index was up 2.8 per cent, its biggest jump in a month. The index is down 4.7 per cent so far this month.

Continued resilience in “safe haven” assets such as US Treasuries underscored persistent concerns about the speed of economic growth, keeping bond yields near historic lows.

US Federal Reserve Chairman Ben Bernanke repeated in congressional testimony on Wednesday the central bank's pledge to act if the economy needed it as he underscored his concerns, specifically in the job market.

US Ten-year Treasuries edged up around 1/32 in price to yield 1.489 per cent, down roughly 1 basis point from late US trade on Wednesday.

NO DOUBLE-DIP

Despite his gloomy view on the US economy Bernanke downplayed the risks of a double-dip recession.

That, combined with geo-political fears arising out of violence in Syria, underpinned oil prices with Brent crude  holding steady above $105 on Thursday, near a seven-week high.

US crude was up 0.5 per cent at $90.27 a barrel.

Copper prices also remained firm as better-than-expected housing data from the US and China eased concerns about demand. The most active November copper contract on the Shanghai Futures Exchange rose 0.2 per cent to 55,880 yuan ($8,800) per tonne.

But investors are expected to remain cautious, with an eye on the euro zone after German Chancellor Angela Merkel's comments that a solution to the bloc's problems was not yet in sight, rekindling fears about the grouping's finances.

“We have not yet shaped the European project in a way that we can be sure that everything will turn out well, we still have work to do,” Merkel said in an interview posted on her Christian Democratic Union party's website, according to a media report.

The euro was last at $1.2288 up from its overnight low of $1.2216.