Asian stocks neared 22-month highs on Wednesday as regional investors largely shrugged off festering worries about fiscal problems in Europe and focused on a recovery in the world economy.

The upbeat mood about global growth was also reflected in commodity markets, with copper prices hovering near 20-month highs and oil prices near 18-month peaks.

Financial spreadbetters expected Britain's FTSE 100 <.FTSE> to open down 2 to 4 points, Germany's DAX <.GDAXI> to open up 11 points, and France's CAC 40 <.FCHI> to open down 2 to 3 points.

While worries about Greece's ability to cut its mountain of debt continued to weigh on the euro, those concerns scarcely caused a ripple in Asian markets. Instead, some investors cited profit-taking as the biggest near-term threat to the regional rally in stocks, bonds and currencies.

A recent run of strong U.S. data from jobs to manufacturing and service activity have fanned hopes the world's biggest economy was slowly stirring again.

Mounting expectations that China may revalue the yuan some time this year also bolstered the appeal of regional currencies and assets.

Underscoring Asia's bright growth prospects, the World Bank sharply raised its forecasts for economic growth in East Asia to 8.7 percent on Wednesday, up from its previous 7.8 percent estimate, led by China.

Current economic data does seem to suggest the (Chinese) economy is churning along nicely, said Belle Liang, head of research at Core Pacific-Yamaichi.

The market is also speculating that the yuan will appreciate this year, leading to some currency inflows today.

China hinted at its readiness to let the yuan rise on Wednesday by alerting exporters to potential risks. The market expects the yuan to rise by 3 percent against the U.S. dollar in the next year.

That has lifted other Asian currencies seen as proxies for the yuan, especially the Malaysian ringgit, which has risen 7 percent this year.

The MSCI's broad measure of shares in the Asia-Pacific outside Japan <.MIAPJ0000PUS> rose 0.7 percent on Wednesday, nearing levels last seen in June 2008.

It has gained nearly 5 percent so far this year and an impressive 73 percent since the end of 2008, more than double the 30 percent jump in the U.S. S&P 500 <.SPX> over the same period as Asia rebounds from the global crisis far faster than major Western economies.

RIPE FOR PULLBACK

But the Asia ex-Japan index looks increasingly ripe for a pullback, with the 14-day relative strength index reading 83, well above the 70 mark which points to a market being overbought.

Hong Kong shares were among the strongest risers on Wednesday, with the Hang Seng Index <.HSI> up as high as 1.5 percent as traders returned from a five-day holiday weekend and caught up to gains elsewhere in the world that have been fueled by upbeat U.S. economic data.

Japan's Nikkei <.N225> was flat as the Bank of Japan concluded its policy meeting by keeping interest rates steady at 0.1 percent, as expected.

Copper was strong just under $8,000 a tonne after touching a 20-month high of $8,010 the previous day.

Still, it is not clear skies ahead for world markets. The global economy could slip again when monetary and fiscal stimulus are withdrawn; U.S. unemployment is still stubbornly high, and the euro zone is plagued by doubts of its viability.

The struggling euro took another knock from worries around Greece's fiscal problems. The common currency was soft at $1.3363, within sight of an 11-month trough of $1.3265 hit late in March.

Hourly charts show if the euro breaches $1.3342, which marks the 76.4 percent retracement level of its ascent from $1.3265 to $1.3591, it may force it to retest levels around

$1.3260.

The latest wave of selling, which traders said was led by macro hedge funds, was set off by reports that Greece wants to amend an EU-IMF safety net deal set up late last month to help pay for its debts in an emergency.

Although Greece denied the reports, the market paid no heed and continued to bet on Athens having troubles cutting its debt burden, even as its borrowing costs mount.

Investors demanded a yield of close to 7.5 percent for buying 10-year Greek bonds. That is nearly 100 basis points above levels seen last week, and over 400 basis points above German Bunds, the biggest premium since Greece joined the euro in 2001.

(Additional reporting by Kelvin Soh in HONG KONG and Samuel Shen in SHANGHAI)

(Editing by Raju Gopalakrishnan)

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