GLOBAL MARKETS-Asian shares rise on global recovery as Fed fears ease
* MSCI Asia ex-Japan inches up, Nikkei opens up 1.05 pct
* Investors keep wary eyes on China markets
TOKYO, June 27 (Reuters) - Asian shares extended gains on Thursday, buoyed by rising global equities overnight on expectations the U.S. Federal Reserve will not rush to end its stimulus programme, but investor caution over Chinese markets capped the upside.
The dollar rose and global equity markets advanced for a second day on Wednesday after a surprisingly sharp downward revision to first-quarter U.S. economic growth eased fears that the Fed would soon wind down its bond-buying scheme which has underpinned investor risk appetite.
Still, with volatility amplified this week by fears of Chinese credit problems undermining growth in the world's second largest economy, investors warily waited for Chinese markets to start trading.
"If China shares are weak again today, the Japanese market could see volatility and the Nikkei could be dragged down to around 12,800, so the market could be volatile after the Shanghai market opens (at 0130 GMT)," said Kenichi Hirano, a strategist at Tachibana Securities.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent after climbing 1.85 percent on Wednesday to break a four-day losing streak and moving away from an 11-month low touched earlier in the week. Still, the gauge's relative strength index (RSI) remained weak with investor confidence still shaken by a month-long emerging markets slide.
Australian shares gained 0.7 percent, against a background of concerns over slower growth in China and the surprise change of prime minister late on Wednesday.
South Korean shares jumped 2 percent as battered stocks drew bargain hunters.
Also on Wednesday, European Central Bank President Mario Draghi said an exit from the ECB's exceptional monetary policy measures remains distant, noting downside risks to growth in the euro zone economy and the ECB's readiness to take fresh action when called for.
These comments came as China's central bank earlier this week moved to quell concerns about a credit crunch after days of spiking interbank rates by saying it had provided funds to some institutions and will do so if there is a need.
Japan's Nikkei stock average opened up 1.05 percent after declines in Chinese financial stocks pulled the index down to end the previous day with a 1 percent loss.
But after the Nikkei closed, China shares ended flat in choppy trade on Wednesday, trimming early losses as Chinese financial markets were calmed by the central bank's pledge to prevent any lasting credit crunch.
Hong Kong indexes had their best day in nearly six months as investors hunted for bargains after recent market turmoil, with China banking sectors rebounding from big hits prompted by the mainland cash crunch.
The dollar eased, with its index against a basket of major currencies down 0.1 percent after reaching a near one-month high of 83.025 on Wednesday.
The dollar was also down 0.1 percent against the yen at 97.68 and steady against the euro at $1.3011.
U.S. Treasuries prices ended higher on Wednesday on weaker than expected GDP, but a five-year Treasury note auction drew its lowest demand since September 2009, showing persistent jitters over the Fed's future policy course.
U.S. crude futures inched down 0.1 percent to $95.40 a barrel.
Spot gold hovered just above Wednesday's near three-year low of $1,221.80 an ounce.