Asia shares rise on Apple earnings and China

Asian stocks rose on Wednesday as investors cheered Apple's strong earnings and on optimism that China may roll back policy tightening measures later this year, while the euro firmed ahead of euro zone's bank stress test results late in the week.

Markets were cautious ahead of testimony from Federal Reserve Chairman Ben Bernanke to Congress due at 1800 GMT for fresh indications on the health of world's biggest economy, and policy signals from the central bank.

European stocks were set to track Wall Street and Asia higher, with financial spreadbetters expecting Britain's FTSE 100 <.FTSE> to open 1 percent higher; Germany's DAX <.GDAXI> to open up 0.8 percent, and France's CAC 40 <.FCHI> to gain 1.5 percent.

The MSCI index of Asia Pacific ex-Japan stocks <.MIAPJ0000PUS> rose 0.6 percent, led by the resources sector <.MIAPJMT00PUS>, which jumped 1.7 percent on hopes that China's voracious demand for commodities would remain strong. South Korean shares <.KS11> rose 0.7 percent, buoyed by memory chip makers such as Samsung Electronics <005930.KS> on hopes memory chip demand would stay robust after Apple posted stronger-than-expected results and gave an unusually upbeat revenue forecast after the Wall Street closing bell.

Weak revenue growth reported by some other major U.S. firms over the last week had fueled fears that its economic recovery was losing momentum.

Apple's strong set of results and U.S. Nasdaq index futures' subsequent gains, have prompted foreign buying into Seoul technology stocks, said Kim Seong-bong, a market analyst at Samsung Securities.

Apple's earnings point to earnings growth for domestic memory chip makers, which probably supply chips to Apple, said Lim Dong-min, a market analyst at KB Investment & Securities.

Shares of Apple, maker of the iPhone and iPad, jumped more than 3 percent in after-hours trade, which could help U.S. stocks to their third straight day of gains on Wednesday.

Investors are also awaiting earnings results later on Wednesday from the likes of Morgan Stanley , Coca-Cola and eBay .

Indonesian stocks <.JKSE> rose as much as 0.6 percent to a record high, as investors bought into banks, consumer plays and resource firms on the backdrop of strong growth and political stability in Southeast Asia's largest economy.

Japan's Nikkei average <.N225> inched down 0.2 percent, weighed down by worries about a stronger yen and doubts over the U.S. economic recovery.

CHINA POLICY

Overall, risk-taking in Asia was buoyed by rising optimism that the Chinese authorities would roll back policy tightening later this year to support economic growth.

China's annual economic growth decelerated to 10.3 percent in the second quarter from 11.9 percent in the first quarter.

Our base case is for loosening to occur in the three months starting from August but even sooner is possible, analysts at Goldman said in a report issued this week.

In currency markets, the euro inched up against the dollar, a day after being knocked from a 10-week high above $1.3000 due to profit-taking ahead of euro zone bank stress test results due out on Friday.

The euro rose slightly to $1.2895. It hit $1.3029 on Tuesday, its highest since May 10, and has now tested the $1.3000 level for three days in a row.

Investors are likely to keep taking profits in the near term on the euro's sharp rally which has taken it up more than 8 percent since it hit a 4-year low of $1.1876 in early June, traders say.

The results of stress tests on 91 European banks, due for release on Friday, are expected to show most of them would be able to survive severe economic shocks.

But they are unlikely to solve problems for weaker banks which need new funding capital the most, and could even raise more questions about how authorities will treat any banks that fail the test.

Investors are also concerned over how transparent the test criteria and the test results will be. European Union finance ministers were divided last week over how much of the data should be released to the public.

A wave of capital raisings by bigger regional banks, similar to that seen after U.S. stress tests, could also add pressure on European and global equity markets.

Elsewhere, spot gold fell about $2.8 to $1,189.6 per ounce, a day after it hit a 2-month low at $1,175.35 before rebounding sharply to above $1,190 on chart-based buying.

Gold struck a record in late June on worries the European debt crisis would spread.

(Editing by Kazunori Takada)