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Copper also bounced off one-month lows, although the dollar stayed on the back foot as some investors worry that the U.S. economy would be vulnerable to high oil prices, given its reliance on consumer spending to drive growth.

London Brent crude rose as high as $113 a barrel for the first time since September 2008, having gained nearly 10 percent in the past four sessions. U.S. crude last traded at around $99.38 a barrel, a whisker away from Wednesday's high of $100.

Worries that higher energy prices will crimp corporate profits had sparked a steep selloff in Asian stocks in the past two sessions, but that looked to be losing its punch.

Japan's Nikkei 225 index .N225, while still 0.4 percent lower on the day, was off its lows and stocks elsewhere in Asia .MIAPJ0000PUS erased early losses to be up 0.4 percent.

"As Japanese stocks have tumbled for the past two sessions (losing 2.6 percent), today's losses may not be sharp," said Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets.

Hong Kong's Hang Seng .HSI put on 0.2 percent and China's Shanghai Composite Index .SSEC edged up 0.2 percent. Gains in U.S. stock futures suggest a steadier start on Wall Street after two sessions of declines.

Gold, a traditional safe haven in times of trouble, traded at around $1,412 an ounce, not far from a record high around $1,430 set in December.

Copper gained 1.1 percent to $9,526 a metric ton, climbing off a one-month low of $9,365.

The dollar index .DXY, which tracks its performance against a basket of major currencies, shed 0.3 percent to 77.173.

Against the Swiss franc, the dollar fell to a record low at around 0.9277 franc, surpassing the previous trough of 0.9301 set at the end of the year.

The euro held firm at $1.3776, coming within easy reach of its February 2 peak of $1.3862, helped also by recent hawkish comments on inflation by European Central Bank officials, which raised expectations the ECB will hike interest rates before the Federal Reserve.

"There may be a realization that if oil prices rise sharply, that would hit all the developed countries and in that sense it effects every major currency the same," said Tsutomu Soma, manager of foreign bonds at Okasan Securities.

"And if the impact from the Middle East crisis is roughly equal on each currency, you could argue that currencies with a yield advantage will benefit at the end of the day," Soma said.

The New Zealand dollar continued to struggle at two-month lows below $0.7500, with markets now pricing in an 88 percent chance that the next rate move will be a 25 basis point cut.

The move followed the deadly earthquake that hit the country's second biggest city of Christchurch Tuesday.

(Additional reporting by Ayai Tomisawa and Hideyuki Sano in Tokyo; Editing by Tomasz Janowski and Yoko Nishikawa)

GM's results, due on Thursday, come at a pivotal time for investor sentiment in the U.S. auto industry, still widely seen as being in the early stage of recovery from its near-collapse in 2008 and 2009.

Analysts have been encouraged by GM's strength in China and its progress in slashing costs and debt in a bankruptcy funded by the Obama administration in 2009.

But since GM's record-setting $23 billion initial public offering in November, investors have also become concerned about the pressure on profit margins from rising commodity prices, higher costs for launching new vehicles and the risk of a sustained spike in oil prices.

GM's closest rival Ford Motor Co reported a fourth-quarter profit last month that fell far short of expectations after a $1 billion surge in costs from the third quarter.

The results sent both Ford and GM shares lower as investors worried about the risk that higher costs for everything from steel to plastic to the engineering teams behind new vehicles would erode profitability in future quarters.

GM shares have fallen 11 percent in the four weeks since Ford's results. Ford is down 21 percent in the same period.

GM management led by Chief Executive Dan Akerson had cautioned in a January meeting with analysts that fourth-quarter earnings would be below the rate for the first three quarters of the year.

"Ford has obviously taken a lot of wind out of the upside speculation of GM," said Josef Schuster, founder of IPOX Schuster LLC and a fund manager specializing in IPOs.

"If Ford is not meeting the earnings (expectations), it's hard to imagine that GM would strongly outperform," said Schuster, whose funds hold GM shares.

Analysts polled by Thomson Reuters I/B/E/S on average forecast fourth-quarter profit for GM of about $966 million and a full-year 2010 profit of about $5.3 billion.

Fourth-quarter revenue is expected to be nearly $33 billion with earnings of 46 cents per share, according to the average forecasts.

From 2005 to 2009, GM had lost about $88 billion in its slide to bankruptcy.

In the decade prior to then, annual U.S. auto sales averaged almost 17 million vehicles. The total plunged to a low of 10.4 million in 2009, the year that GM was overtaken by Toyota Motor Corp as the global top seller.

FOCUS ON EUROPE, ASIA

U.S. crude futures continued to climb, reaching a 2-1/2-year peak above $96 a barrel on concern that unrest in oil-rich Libya could spread to other top oil producers in the region and cut more output.

A senior aide to Muammar Gaddafi's influential son Saif resigned on Wednesday, the latest top official to walk out after the Libyan leader vowed to crush a revolt that threatens his four-decade rule.

European stocks fell for a third consecutive session on Wednesday, down 0.3 percent in morning trade, with tech shares featuring among the top losers.

U.S. tech shares will be in the spotlight after Hewlett-Packard Co (HPQ.N) trimmed its 2011 revenue projections on weak consumer PC demand and a lackluster showing from its IT services arm, sending its shares plummeting 12 percent in after-hour trading. Shares of the company traded in Frankfurt (HPQ.N) were down 11 percent.

Nasdaq OMX Group Inc (NDAQ.O), left out of a global merger frenzy among exchanges, is exploring options that include teaming up with a partner on a rival bid for NYSE Euronext (NYX.PA) (NYX.N), a person familiar with the situation said on Tuesday.

The U.S. Air Force may announce as early as Thursday whether Boeing Co (BA.N) or Europe's EADS (EAD.PA) has won a projected $35 billion contract for 179 new refueling planes, a senior defense official said.

Car rental company Hertz Global Holdings Inc (HTZ.N) posted a better-than-expected fourth-quarter adjusted profit, helped by strong growth at its U.S. off-airport business.

The Federal Reserve's monetary policy should remain accommodative for some time yet, Chicago Federal Reserve President Charles Evans was quoted on Wednesday as saying.

Wall Street suffered its worst day since August on Tuesday as investors dumped stocks on turmoil in oil exporter Libya, in what could be the start of a long-anticipated pullback after a lengthy rally.

The Dow Jones industrial average .DJI lost 178.46 points, or 1.44 percent, to end at 12,212.79. The Standard & Poor's 500 Index .SPX fell 27.57 points, or 2.05 percent, to 1,315.44. The Nasdaq Composite Index .IXIC dropped 77.53 points, or 2.74 percent, to 2,756.42.

(Reporting by Blaise Robinson; Editing by Jon Loades-Carter)

This is one option Nasdaq, valued at $5.7 billion, is considering as a spate of deals shakes up a global industry under intense cost pressure from upstart electronic rivals.

Looking to press home a merger between Toronto market operator TMX Group Inc and the London Stock Exchange, the head of TMX warned Canadian lawmakers opposed to the tie up that the country risked damaging its free-trade credentials if it blocked the agreed deal.

TMX Chief Executive Thomas Kloet told Reuters in an interview he was taking political opposition to a deal "very seriously."

Even so, he said Canada was putting its reputation on free trade and competition on the line as it considers a proposal to create a transatlantic operator worth $7 billion in market value and the world's fifth-largest exchange ranked by trading volume.

"One of the things Canada has to make sure to consider as it goes through this is what if it says no," Kloet said.

While the agreed merger of LSE and TMX has piqued the interest of industry experts, the merger talks between Deutsche Boerse and NYSE Euronext is drawing comparisons with the Chicago Mercantile Exchange (CME), the world's biggest derivatives marketplace.

Nasdaq focuses on intensely competitive, low-margin equities trading, so may feel vulnerable to more price-competitive exchanges that could result from the wave of merger plans.

A source familiar with the matter told Reuters that Nasdaq's alternatives include the possibility of tying up with IntercontinentalExchange Inc or CME to wrest NYSE Euronext out of its planned $10.2 billion takeover by Deutsche Boerse.

The source asked to remain anonymous because the talks are private.

The Wall Street Journal said Nasdaq may also consider selling itself or buying another competitor if it is unable to compete with Deutsche Boerse on the NYSE deal. A Nasdaq spokesman was not available to comment.

NYSE Euronext and Deutsche Boerse dominate futures and options on European bonds, shares and rates, with Deutsche Boerse's Eurex unit focused on the long end of the interest rate curve and NYSE Euronext's Liffe unit on the short end.

The Deutsche Boerse-NYSE Euronext merger would give the combination annual trading volume exceeding $20 trillion but to succeed it needs approval from a host of regulators.

A $7.9 billion bid by Singapore Exchange for the Australia stock exchange operator ASX Ltd late last year kicked off a wave of industry consolidation last seen just before the global financial crisis.

NO BIG ASIAN M&A