* MSCI Asia ex-Japan up 0.3 pct, Nikkei recovers from 3-week low
* Gold up and nears highs since mid-November
* Aussie slips as RBA cuts rates citing softer global growth outlook
* European shares likely decline
By Chikako Mogi
TOKYO, Oct 2 (Reuters) - Asian shares and the euro rose on Tuesday after a surprising expansion in U.S. factory activity helped investors override concerns about weak overall global growth, and some market players said riskier assets should continue to find support.
U.S. stock futures
inched up 0.1 percent, suggesting a firm start on Wall Street, but financial spreadbetters expected London's FTSE 100
, Paris's CAC-40 and Frankfurt's DAX
to open down as much as 0.7 percent.
The Reserve Bank of Australia cut its main cash rate a quarter point to 3.25 percent on Tuesday, the third cut in six months as the slowdown in China, a high local dollar, soft export prices and benign inflation all argued for easier policy.
The Australian dollar
slipped to a one-month low of $1.0305 from around $1.0363 before the announcement, but Australian shares
extended gains to rise 1 percent compared to a 0.7 percent rise before the decision.
"We have to say that if they thought the case today was compelling, then the odds are that things are travelling faster than they thought and that leaves the door open for another cut we think before year end," said Su-Lin Ong, senior economist at RBC Capital Markets.
The MSCI index of Asia-Pacific shares outside Japan
rose 0.3 percent. South Korean shares
edged 0.2 percent higher. Markets in China, Hong Kong and India were closed for holidays.
Japan's Nikkei stock average was up 0.2 percent, recovering from a three-week low hit on Monday.
U.S. manufacturing grew last month for the first time since May, keeping the Standard & Poor's 500 Index
not far from its strongest close since December 2007 hit in September.
"Although the markets seem anaemic against a backdrop of uncertainly from Europe, we do see a potential uptrend and hope the worst is now behind us," said Mikayel Verdyan, an analyst at online broker Forex Club.
Europe's debt crisis will remain investors' focus for some time, but attention will gradually shift to the Nov. 6 U.S. presidential elections and quarterly U.S. earnings, he said, adding that markets may rally two weeks before the U.S. election, although the S&P 500 will be capped around 1,520.
"With a gradual rise in the stock markets, we would expect to see the financial sector benefit from this as it appears fairly oversold at present," he said.
Euro zone factories suffered their worst quarter since early 2009 and China lost more steam, suggesting the global economy faces hurdles as it tries to outrun recession.
U.S. Federal Reserve Chairman Ben Bernanke said the Fed did not foresee a recession but growth was too slow to bring down the nation's jobless rate. U.S. jobs data due on Friday will offer the first glimpse into the state of the U.S. economy after the Fed embarked on new stimulus last month.
Barclays Capital said despite recent weak data on global manufacturing, the environment for riskier assets remains supportive as investors have been reassured by policy steps in Europe and the United States.
"Expectations for the recovery have been ratcheted down enough to mitigate the risk of disappointed and anxious reactions," it said in a research note.
The euro was up 0.2 percent to $1.2907
, moving away from a three-week low of $1.28035 touched on Monday, but was vulnerable as investors waited for Spain to seek a sovereign bailout and remained wary of a possible Moody's credit rating cut of Spain to junk status.
Graphic of global rates:
Markit PMI: US, Europe, China:
Euro zone unemployment rate: Interactive crisis timeline
The chance for an interest rate cut next week by South Korea grew after the country's central bank said it was now directing policy at lifting economic growth, after a survey showed the manufacturing sector shrank by the most in nearly four years.
The RBA kicked off a week of central bank policy decisions, with the European Central Bank, the Bank of England and the Bank of Japan following later this week.
Other key events include the Eurogroup meeting next Monday.
Greece unveiled on Monday a harsher austerity budget for 2013 which aims to pave the way for an international aid crucial to keep the country afloat as its finance minister met global lenders, who still object to some of the measures.
Spain is ready to request a sovereign bailout as early as next weekend but Germany has signalled that it should hold off, European officials said on Monday. Madrid has announced severe 2013 budget and economic reforms and the result of stress tests on its banks, moves seen to clear the way for such aid.
"We still like longs in peripheral risk over a one to two-month holding period ... We prefer to put longs back on any substantial weakness, such as a Moody's downgrade of Spain," Societe Generale said in a research note on bonds.
rose 0.2 percent to $1,777.39 an ounce, off Monday's high of $1,791.20, its loftiest since mid-November.
eased 0.2 percent to $92.30 a barrel and Brent
inched down 0.1 percent to $112.07. London copper
fell 0.3 percent to $8,275.25 a tonne.
(Additional reporting by Wayne Cole in Sydney; Editing by Edwina Gibbs & Kim Coghill)
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