Asian stocks rose to a three-week high on Wednesday, led by gains in tech shares after Intel's results beat market expectations, while the euro held firm near two-month peaks against a softer U.S. dollar.

European shares <.FTEU3> extended their rally into a seventh session, rising 0.3 percent in early trade, as Intel's results allayed fears that companies may be slowing down their spending on technology. <.EU>

A strong start to the U.S. corporate earnings season this week and easing concerns about the euro zone's sovereign debt problems have helped buoy sentiment in recent sessions after a raft of weak U.S. economic data sparked worries that the global economic recovery was faltering.

Investors also brushed aside a Moody's downgrade of Portugal's sovereign credit rating by two notches, and chose to focus on the strong response to a treasury bill tender by debt-laden Greece.

After the close on Wall Street, Intel Corp , the world's top microchip maker, reported second-quarter earnings that blew past analysts' expectations.

Intel's upbeat view boosted Asian chip-related shares. Samsung Electronics Co <005930.KS>, the world's top maker of DRAM memory chips, rose 3.5 percent and leading contract chipmaker TSMC <2330.TW> gained 1.3 percent.

We believe Intel's result is just the beginning of the many forecast-beating earnings to be reported by major U.S. companies, said Yu Rayming, chief investment officer of Prudential Financial Securities Investment Trust in Taiwan.

Investor worries about a double dip in the global economy have apparently eased, but bear in mind there is still uncertainty hanging over the euro zone debt problems.

The MSCI ex-Japan share index <.MIAPJ0000PUS> was up 1.5 percent, having earlier risen as much as 1.7 percent to its highest since late June, after U.S. stocks rallied for a sixth straight day on Tuesday. <.N>

Optimism about this season's earnings rose after Alcoa posted second-quarter results late on Monday that beat expectations. Rail company CSX also posted a higher-than-expected profit.

Adding to the upbeat note, Intel executives said there are clear signs of renewed spending by corporations.

Now that corporations have some breathing room in the economy and their budgets, you're starting to see those machines that were four or five years old get refreshed, Intel CEO Paul Otellini said in a conference call with analysts.

Japan's Nikkei average <.N225> surged 2.7 percent to its highest close in three weeks, with chip gear manufacturer Tokyo Electron <8035.T> and other chip-related shares powering higher. Tokyo Electron rose 4.1 percent. <.T>

The Nikkei ended at 9,795.24 points, cracking resistance at the level of its 25-day moving average around 9,660.

Shares of Komatsu <6301.T>, the world's No.2 construction machinery maker, jumped more than 5 percent after it sharply raised its full-year profit forecast, citing better-than-expected first-half sales in Asia and Latin America, as well as a pick up in demand in Japan and the United States.

Buoyed by gains in tech stocks and strong buying by foreign investors, South Korea's benchmark share index <.KS11> closed at its highest level in more than two years, while Taiwan stocks <.TWII> hit a two-month closing high. Both were up more than 1 percent.

The focus is now on quarterly reports from JPMorgan on Thursday and General Electric on Friday. China will also report its second quarter GDP figures on Thursday amid signs that its rapid growth is moderating.

Still, some market watchers remained wary, noting that further gains may be hard to achieve in the short term.

An accumulation of long positions in the market, especially in blue-chip exporters, could slow upward momentum, one analyst said. Many rallies in recent weeks have been short lived as traders quickly took profits after any negative news.

Even though Intel may be good, there's some concern about the bank earnings later this week. Good results from them are necessary for the market to go much higher, said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

EURO STEADY

In currency markets, the euro held steady at $1.2710 on trading platform EBS, having jumped nearly 1 percent in the previous session. It hit a two-month peak of $1.2739 on Tuesday.

Investors were also seen adding to long positions in high-yielding currencies amid a seemingly significant improvement in appetite for riskier assets.

What we are seeing is that cash is being put back to work with all the negative news surrounding the euro zone receding, said Greg Gibbs, currency strategist at RBS, Sydney.

Some of the risk premium that was being attached to the euro zone is being taken off. The downgrade of Portugal was very much expected and we could see the euro rise a bit more from here.

The Aussie and New Zealand dollars held near two-month highs. The Aussie climbed to $0.8851 with resistance at the June high of $0.8860, and at $0.8885, the 100-day moving average and 61.8 percent retracement of its April 12 to May 25 slide.

The New Zealand dollar pared some of its gains to trade at $0.7170 after retail sales in May rose less than expected. Still, the data did little to alter expectations of more interest rate rises.

Crude oil futures were little changed around $77 a barrel after jumping nearly 3 percent overnight as better-than-expected corporate earnings boosted confidence about the economy.

(Additional reporting by Anirban Nag in Sydney, Elaine Lies in Tokyo and Faith Hung in Taipei)

(Editing by Kim Coghill)

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