GLOBAL MARKETS-Asian shares recover, but confidence lags

                                
 * Asian shares post first gain in six sessions
                                
 * Mood still cautious; some government debt gains
                                
 * Oil up more than $1 a barrel on Saudi output cut
                                
 * Euro recovers from recent falls; ECB still in focus
 (Adds European outlook, updates prices)
                                
 By Rafael Nam
                                
 HONG KONG, Jan 14 (Reuters) - Asian shares recovered on
Wednesday from a steep five-day sell-off and oil rose on
expectations for production cuts, though the mood remained
cautious given nagging worries about the economy and earnings.
                                
 Some regional bonds, seen as safer bets in volatile times,
gained in a sign of the concerns about risk. The euro recovered
after hitting a one-month low against the dollar on Tuesday,
but gains were limited ahead of an expected interest rate cut
by the European Central Bank on Thursday. [ID:nLC579482]
                                
 European shares were set to gain in tandem with Asian
counterparts though advances may be capped by worries over what
could be a difficult earnings reporting season.
                                
 Weak economic data and a bleak outlook for quarterly
results has hampered what had been a promising start to the
year, though the continued flood of new corporate bond sales
globally at least points to some investors' willingness to take
on risk.
                                
 "We know the outlook is awful, but then we know that the
market has priced in a very bleak scenario. So you've got this
tug-of-war that occurs between the bad news and the deep
valuation (discount)," said Lee Mickelburough, a partner at
Perennial Growth Management in Australia.
                                
 The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> advanced 2.2 percent by 0640 GMT, rebounding
from a 9 percent loss over the previous five sessions.
                                
 The index remains down around 2.5 percent for the year.
                                
 Concerns about the global economy remain. Data on Tuesday
showed U.S. imports fell a record 12 percent in November, a bad
omen for global companies that rely on U.S. consumers to power
earnings. [ID:nN13386136]
                                
 Corporate earnings are being hit across the world,
resulting in job cuts that could further cripple consumer
spending. South Korea suffered its first monthly net job loss
in more than five years in December, data on Wednesday showed.
[ID:nSEO358717]
                                
 Some companies may have to cut dividends to conserve
capital. Australian conglomerate Wesfarmers Ltd <WES.AX> said
on Wednesday it was considering that option, sending shares
down 2.9 percent.
                                
 Still, Asian shares posted gains on Wednesday, as some
investors saw recent steep declines in shares such as Sony Corp
<6758.T> as overdone.
                                
 The Nikkei average <.N225> advanced 0.3 percent, recovering
from its near-5 percent drop on Tuesday.
                                
 Talk of asset sales and acquisitions boosted some shares.
Nissan Motor Co <7201.T> gained 3.5 percent after sources told
Reuters that Chrysler is in talks to sell key assets to
Renault-Nissan and auto supplier Magna. [ID:nN13428466]
                                
 News that Toshiba Corp <6502.T> was in talks to buy Fujitsu
Ltd's <6702.T> hard-disk drive business in a deal reportedly
worth $340-450 million sent both up over 5 percent.
[ID:nT161757]
                                
 Shares in Hong Kong <.HSI>, Shanghai <.SSEC> and India
<.BSESN> gained 2-3 percent each, while indexes in South Korea
<.KS11> and Singapore <.FTSTI> advanced over 1 percent each.
                                
 Markets in Australia <.AXJO> rose 0.9 percent, with Taiwan
<.TWII> posting a modest loss.
                                
 NO CERTAINTY
                                
 Fears of an economic downturn have also dented commodities
given expectations for reduced demand.
                                
 U.S. crude oil futures <CLc1> rose $1.35 to $39.15 a barrel
as OPEC kept up its talk of production cuts and a cold snap in
the United States boosted heating oil demand. [ID:nLD251825]
[ID:nLD591955]
                                
 Crude prices have plunged more than $110 since hitting a
record high just under $150 a barrel in July.
                                
 Encouraged by falling inflation, central banks are cutting
interest rates, and policy makers are implementing big stimulus
plans to resuscitate economic growth.
                                
 The European Central Bank is expected to cut interest rates
on Thursday by 50 basis points from the current 2.5 percent,
which remains higher than the near-zero rates in the United
States and Japan.
                                
 The euro rose to $1.3279 <EUR=>, up 0.8 percent from late
New York trade, after hitting a one-month low of $1.3140 on
trading platform EBS the previous day.
                                
 Against the yen, the single currency gained 1 percent to
119.20 yen <EURJPY=R>. It had fallen as low as 117.13 yen on
EBS on Tuesday, the lowest since early December.
                                
 The lack of certainty is being reflected by the continued
gains in government debt despite yields at their lowest in
years.
                                
 Australian three-year bond futures <YTTc1> added 0.005
points to 96.85, but eased off an all-time high of 96.88
points, while 10-year bond futures <YTCc1> fell 0.025 points to
96.015, off a record high of 96.065 points.
                                
 Still there are also signs that investors are willing to
add risk in the hunt for higher yield, as evidenced by the
surge in global corporate debt issuance this month, both from
government-backed lenders and non-financial firms.
                                
 European credit markets were on track to set a record for
supply in January, with more than 14 billion euros worth of
non-financial euro-denominated investment-grade bonds sold.
That approaches the record 25 billion euros raised in January
2003. [ID:nLD47021]
 (Editing by Lincoln Feast)