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Both U.S. crude and Brent crude prices edged up as Libyan rebels repulsed a land and air offensive by Muammar Gaddafi's forces and the defiant leader warned foreign powers of "another Vietnam" if they intervened.

Markets worry the growing instability in key Middle East oil producing countries could signal another threat to global supplies. Bank of America/Merrill Lynch analysts argue the oil shock from Libya ranks as the eighth largest supply shock since 1950.

"The stability of the region has gone through a major shock and the ripples are going to be felt for a while," said Carl Larry, president of Oil Outlooks and Opinions based in Houston.

Gold, often sought in times of heightened geopolitical tensions and as an inflation hedge, traded at around $1,433 an ounce, within striking distance of a record high just above $1,440.

Tokyo's Nikkei average .N225 rose 0.5 percent, following a more than 2 percent fall on Wednesday, while stocks elsewhere in Asia .MIAPJ0000PUS gained 0.6 percent.

"It's too early to be optimistic because concerns about rising oil prices will likely persist," Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets, cautioned.

"But investors might have oversold yesterday, so they may buy back stocks with good fundamentals."

South Korea's KOSPI .KS11 was among the best performers in the region, advancing 1.6 percent, a day after plumbing a three-month low.

Nomura analysts said they were turning more cautious on Korea, worried the country's policy management could leave the economy with a much higher inflation rate and more catch up to do later. They also cited relative competition from Japanese companies as the won appreciates and oil prices strengthened.

U.S. crude rose 0.2 percent to $102.47 a barrel, not far from the recent peak at $103.41, while Brent crude was also 0.2 percent higher at $116.63, closing in on the February 24 high near $120.

Wall Street eked out small gains on Wednesday with the S&P 500 index .SPX ending 0.2 percent higher after the Federal Reserve's Beige Book suggested economic activity picked up in 2011 and a private survey pointed to strong private-sector hiring.

The private-sector jobs report bodes well for the influential non-farm payrolls data due on Friday.

In the currency market, the euro was a touch softer after rallying to near four-month highs against the dollar. But the single currency is expected to stay supported ahead of the European Central Bank policy meeting.

Markets are wary the ECB will sharpen its anti-inflation rhetoric, reinforcing views the ECB will raise interest rates before the U.S. Federal Reserve.

Bernanke said that a $60 billion cut along the lines being pursued by Republican in the House of Representatives would likely trim growth by around two-tenths of a percentage point in the first year and one-tenth in the next year.

"That would translate into a couple of hundred thousand jobs. So it's not trivial," he said in response to questions from members of the House Financial Services Committee.

The Republican-run House has passed a budget bill for the current fiscal year that includes $61 billion in spending cuts, but majority Democrats in the Senate say the reductions would endanger the economic recovery.

Any spending legislation must be approved by both chambers of Congress before it can become law.

Members of Congress are locked in a bitter fight over the budget, with Republicans, spurred on by Tea Party fiscal conservatives, having made deep spending cuts and immediate deficit reduction a top priority.

The Senate on Tuesday approved a House-passed bill to extend government funding for two more weeks, a move that averts an imminent shutdown of the federal government, but that does nothing to resolve the ongoing budget tussle.

The bill, which now goes to President Barack Obama for his signature, contains $4 billion in relatively noncontroversial cuts, a sum House Republicans see as just a downpayment on their larger goal.

Goldman Sachs economist Jan Hatzius estimated that the larger spending cut bill would trim 1.5 to 2 percentage points off of the annualized economic growth rate in the second and third quarters of this year.

Some of that pullback was already built into Goldman's GDP forecast for 4 percent annualized growth in the second quarter.

"Federal government spending enters directly into the Commerce Department's GDP estimates, so unless there is a full offset from other components of GDP a reduction in federal government spending must reduce GDP on impact," Hatzius wrote in a note to clients.

(Additional reporting by Pedro Nicolaci da Costa, David Lawder, Lucia Mutikani and Emily Kaiser; Editing by Gary Crosse)

Buffett also said he remains on the prowl for a big acquisition, having lost a sizable one in the last day or two, but that there is not a "high probability" of one soon.

Speaking on CNBC television, Buffett maintained his "enormous respect" for the efforts of Federal Reserve Chairman Ben Bernanke to move the economy forward.

He said improvement in the business environment is likely in future months to be reflected by a decline in the U.S. unemployment rate, probably to the low 7 percent range by the November 2012 elections from 9 percent now.

He said such gains suggest no need for more stimulus.

"In the end, I don't think we need more of that," he said.

Activity is probably "inching" ahead in most businesses at Berkshire and in much of the economy, while others are "moving forward" and others are "stuck," he said.

Housing remains a problem, and Buffett said it might take a year to have "sopped up the excess supply" of homes.

In contrast, he said Tuesday's purchase by Berkshire's NetJets unit of up to 120 aircraft from Canada's Bombardier Inc for a possible $6.7 billion based on list prices reflected expected higher demand for luxury business travel.

He also said he expects Berkshire's roughly 80 operating units to add at least 3,000 employees in 2011, after ending last year with 260,519.

Berkshire sells such things as Geico car insurance, Dairy Queen ice cream, Fruit of the Loom underwear, bricks and industrial parts.

"The economy is coming back," Buffett said.

"There is a resiliency to the American system," he added. "It does work. It sputters from time to time, it will sputter from time to time, but you don't want to get worried."

Buffett said the U.S. dollar will "become less important over time" as other economies grow faster.

He also fretted over a U.S. budget deficit equal to roughly 10 percent of gross domestic product, projecting "lots of inflation down the road" unless tough choices are made.

BJ's, which is considering selling the company, also reported a better-than-expected quarterly profit, while Costco's profit met Wall Street's expectations.

Costco, the top U.S. warehouse club operator, said February sales at stores open at least a year rose 8 percent, while analysts were looking for a 7 percent increase, according to Thomson Reuters data.

Smaller competitor BJ's said its February same-store sales rose 5.5 percent. Analysts were expecting a 3.5 percent gain.

Costco, BJ's and Wal-Mart Stores Inc's (WMT.N) Sam's Club experience an increase in sales when the price of gasoline, which some stores sell on-site, rises. The chains sell everything from computers and televisions to bulk packages of avocados, juice and diapers, in warehouse-style stores at which members pay an annual fee to shop.

"Costco remains a top pick" but there may not be enough in its report to move its shares higher on Wednesday, and a modest retreat from Tuesday's closing price of $73.66 is possible, JP Morgan analyst Charles Grom said in a note to clients.

Meanwhile, all eyes are on BJ's potential sale, which "sort of overrides the fundamentals at least for the near term," said Walter Stackow, senior research analyst at Manning & Napier, which has held BJ's shares for nearly three years.

Stackow expects a buyer would be a private equity firm or consortium, not a grocer or other strategic player.

SALES RISE

Costco earned $348 million, or 79 cents per share, in its fiscal second quarter that ended on February 13, up from $299 million, or 67 cents per share, a year earlier. The profit met analysts expectations, according to Thomson Reuters I/B/E/S.

Costco's quarterly sales rose 11 percent to $20.45 billion, excluding membership fees, aided by the addition of sales from its Mexican joint venture. Membership fees rose about 10 percent to $426 million. Second-quarter same-store sales rose 7 percent, including fuel.

BJ's, which opened its doors in 1984, has most of its 190 locations in the Northeast and Mid-Atlantic regions of the United States -- areas battered by a series of storms during the quarter.

It earned $10.2 million, or 19 cents per share, in the fiscal fourth quarter that ended on January 29, sharply below a profit of $54.5 million, or $1.00 per share, a year earlier.

Excluding items in both periods, BJ's earned $51.3 million, or 95 cents per share, slightly ahead of $51 million, or 94 cents per share, a year ago. Analysts were looking for a profit of 92 cents per share.

BJ's quarterly sales rose 7.4 percent to $2.9 billion. As the company said last month, same-store sales rose 3.8 percent and gained 1.7 percent, excluding sales of gasoline.

* Crude oil futures rose above $100 a barrel as tension in Libya ratcheted up, spurring fears other producers in the Middle East and North Africa could face similar popular revolts, and crude and gasoline stocks unexpectedly fell in the world's top oil importer, the United States.

* Two U.S. amphibious assault ships, the Kearsarge and the Ponce, entered Egypt's Suez Canal on Wednesday, on their way to the Mediterranean, a canal official said.

* Japan's Nikkei average fell more than 2 percent, while European stocks were down 0.9 percent in morning trade, on worries that the political unrest could result in persistently high energy prices and derail the global economic recovery.

* Yahoo Inc (YHOO.O) is in advanced talks to leave its Japanese joint venture in an effort to sort out its dysfunctional Asian partnerships and free up as much as $8 billion to fight Google (GOOG.O) and Facebook.

* Adidas (ADSGn.DE), the world's second largest sporting goods company after Nike (NKE.N), increased its sales goal for 2011 on the back of rising consumer confidence and emerging markets growth.

* MBIA Inc (MBI.N), the largest bond insurer in the United States, posted fourth-quarter profit that beat market expectations, helped by a gain on insured derivatives.

* Digital video recorder maker TiVo Inc (TIVO.O) reported a wider quarterly loss as its expenses rose and it forecast a rise in research and development costs.

* U.S. power firm PPL Corp (PPL.N) is buying German utility E.ON's (EONGn.DE) UK power networks for 3.5 billion pounds ($5.6 billion) in cash to create one of the largest electricity distributors in Britain.

* More than a year after igniting the tablet computing craze, Apple Inc (AAPL.O) prepares to unveil the second version of its iPad on Wednesday.

* Bombardier Inc (BBDb.TO) has agreed to sell as many as 120 aircraft to Warren Buffett's NetJets Inc in a deal that could earn it more than $6.7 billion.

* Investors awaited results from Staples, Inc. (SPLS.O), while Costco Wholesale (COST.O) posted a 16 percent jump in its fourth-quarter profit.

* On the economic data front, the focus will be on the ADP employment report, which comes ahead of Friday's key payrolls report. ADP is expected to show a further 175,000 jobs added in February, vs. 187,000 the month before.

* Federal Reserve Chairman Ben Bernanke gives his semi-annual monetary policy testimony before the House Financial Services Committee.

* Concerns that rising oil prices could hurt economic recovery prompted investors on Tuesday to sell stocks and hedge against further declines. The Dow Jones industrial average .DJI fell 169.38 points, or 1.39 percent, at 12,056.96. The Standard & Poor's 500 Index dropped 21.04 points, or 1.59 percent, to 1,306.18. The Nasdaq Composite Index .IXIC lost 44.86 points, or 1.61 percent, to 2,737.41.

* The CBOE Volatility Index VIX .VIX, Wall Street's so-called fear gauge, jumped 14.5 percent to 21.01 on growing uncertainty about oil.

(Reporting by Blaise Robinson; Editing by Greg Mahlich)

A deal to transfer Yahoo's 35 percent stake in Yahoo Japan to Softbank Corp, which already controls 42 percent of the unit, could come within a few weeks, people with knowledge of the discussions said.

If a deal is reached, Yahoo is likely to turn its attention to China, where it owns about 40 percent of prominent Internet company, Alibaba Group, the parent company of Alibaba.com, these people said.

It was not immediately clear what Yahoo wants to do with that stake.

Relations between Yahoo, Softbank and Alibaba have soured in recent years with Alibaba founder Jack Ma agitating to buy back Yahoo's stake in his company and Softbank founder and major shareholder Masayoshi Son openly attacking Yahoo's track record as an innovator and its approach to international markets.

Softbank also owns a stake in Alibaba.

"There is a triangular relationship between the three parties. Anything that happens with Alibaba has to involve all three parties," one of the sources said.

Shares of Yahoo Japan rose 3.7 percent in Tokyo after Reuters first reported the talks on expectations Softbank would pay a premium for the stake. Softbank, Japan's No.3 mobile phone operator, closed 3.6 percent weaker on worries over how it would finance the deal, while Alibaba.com dipped 1.2 percent in Hong Kong.

Softbank, in a statement released through the Tokyo Stock Exchange, said it was not in talks with Yahoo and had no intention to buy its stake in the Japanese business.

CASH INFUSION

A deal for Yahoo's stake in the mature Japanese market could bring a cash infusion that could be viewed favorably by investors, analysts have said.

Leaving the fast-growing and massive China market, where Western internet companies have largely failed to crack the tough regulatory regime and home-grown rivals such as Baidu Inc, would be more controversial.

An Alibaba spokesman declined to comment on Yahoo's intentions in China, although last September the company said it had "moved on" from buying back Yahoo's stake.

As well as owning Alibaba.com, the country's largest business to business online platform, Alibaba Group owns Taobao, China's largest consumer-oriented e-commerce site, and Alipay, China's dominant e-payment service.

Both Alipay and Taobao are unlisted, making valuing the businesses difficult, a factor analysts believe has prevented Yahoo and Alibaba from agreeing a deal. Estimates of the value of Yahoo's stake in Alibaba have ranged from $4 billion to $10 billion, meaning as much as 80 percent of Yahoo's market value is tied up in its Asian assets.