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Japan's benchmark Nikkei average .N225 was up 1.1 percent and MSCI's index of Asia Pacific shares outside Japan rose 0.8 percent. Korea stocks .KS11 rose 1.59 percent, lifted by automakers and shipbuilders.

European shares were expected to rise Wednesday, taking Asia's lead and bouncing from four-week lows. Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI were seen putting on between 0.7 and 0.9 percent, according to financial spreadbetters.

The main Wall Street .N indices ended flat to 0.6 percent lower Tuesday after falling as much as 1 percent, weighed by soft economic data, including a slump in home building, and a lower outlook from tech heavyweight Hewlett-Packard Co. (HPQ.N).

U.S. factory output slipped for the first time in 10 months in April as a shortage of parts from Japan crimped activity and home building slumped, showing the economy got off to a weak start in the second quarter.

Signs of lackluster economic activity were also evident in declining sales at Wal-Mart Stores (WMT.N), and the cut in 2011 profit forecast by Hewlett-Packard.

"As long as investors remain jittery about U.S. economic growth, investment in Japanese manufacturers may be subdued," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

London copper firmed Wednesday, but analysts said gains may be capped as disappointing U.S. data raised more doubts about the global economic recovery.

But amid the U.S. slowdown, the state of the housing market, a big copper user, comes as no surprise, especially after tornadoes lashed parts of the country last month. Home construction only accounts for about 2.2 percent of U.S. GDP.

"On a day-to-day basis, it is almost impossible to predict market movements," said Khiem Do, chairman of the Asia multi-asset team at Barings Asset Management in Hong Kong.

"The U.S. is going through a period of consolidation, but it's still growing. It's not going back to recession, it's just a deceleration. There's nothing too big to worry about."

The euro was steady against the dollar at $1.4274 after recovering from recent lows, but wariness over sovereign debt problems in Europe made investors nervous about piling up euro positions, although traders said signs of clarity in the issue may prompt some buying back of the single currency.

"I feel that the euro-zone debt issue has stabilized slightly for the near term after European finance ministers approved a loan scheme for Portugal, prompting buying back of the euro," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

Europe's top financial officials broke a taboo Tuesday and acknowledged for the first time that Greece may have to restructure its debts, a move which could stoke Europe's sovereign debt crisis.

The U.S. dollar index .DXY, a measure of the U.S. dollar against a basket of currencies, was off 0.31 percent.

GOLD, CRUDE EDGE UP

Gold rose to $1,492.26, after falling for three consecutive sessions. Again, worries about the euro-zone's debt crisis lent support, despite news this week that billionaire financier George Soros dumped almost his entire $800 million stake in bullion investment in the first quarter.

U.S. crude futures bounced back after ending at a 12-week low following industry data that showed a surprise drop in U.S. product inventories.

London Brent crude for July delivery was up 54 cents at $110.53 a barrel, after settling down 85 cents.

NYMEX crude for June delivery was up 79 cents at $97.70 a barrel, after rising to as high as $98.00 earlier.

(Additional reporting by Ayai Tomisawa and Chikafumi Hodo; Editing by Matt Driskill)

The twin leaders of the global PC industry -- under siege from the growing popularity of powerful mobile gadgets like Apple Inc's iPad -- are increasingly venturing into higher-margin services: helping corporations set up networks, servers and storage to engage the cloud.

HP CEO Leo Apotheker vowed to invest heavily on hiring and expanding its services division -- everything from computer maintenance to consulting -- to recover from "missed opportunities" under predecessor Mark Hurd.

But investors sent the stock tumbling more than 7 percent, fearful that costs -- tightly controlled under Hurd -- would balloon and shave points off already-pressured margins.

Dell, on the other hand, showed good progress on advancing margins to a better-than-anticipated 23 percent precisely by moving into higher-margin enterprise solutions and services. Its stock climbed 5 percent.

Dell has been in turnaround mode for more than a year and its efforts are now visible in the results.

"Dell was a company that was struggling and it's paid its dues in terms of investing," Shaw Wu, analyst with Sterne Agee said. "Now you're seeing the fruits of that labor."

"HP underspent, in services in particular, and they're suffering for it," he added.

HP trimmed its sales forecast for the second straight quarter. Dell, on the other hand, raised its operating income outlook for the year on improved profitability.

The latest revision to HP's outlook, the second since Apotheker took over seven months ago, raised questions about the former SAP CEO's ability to spark growth at the technology behemoth.

Several Wall Street investment houses, including Credit Suisse and Barclays, responded to the results by lowering their recommendations or price targets on the stock.

HP and Dell's results underscored the weakness in the global PC market, which is under siege from the growing popularity of mobile devices such as Apple Inc's iPad.

CONSUMER PC SALES FALL

HP's sales of PCs and other devices slid 5 percent in the second quarter. Consumer PC sales in particular dived 20 percent -- greater than the company anticipated.

At Dell, demand for consumer PCs during the quarter fell short of its expectations, hurt partly by tablets, Dell Chief Financial Officer Brian Gladden said in an interview.

The sluggish industrywide consumer PC market plus the lingering supply impact of Japan's earthquake are expected to hurt HP more than Dell profits for the rest of the year.

Dell is less reliant on consumer PC sales and more focused on sales to corporations, which are replacing aging IT gear.

Apotheker, in turn, wants to boost earnings by pushing into sectors such as cloud computing, which for HP involves helping companies to revamp their data centers. Investors are looking for signs of progress on that strategy and the efforts to revamp its services unit.

"Clearly management credibility has taken a hit given that it just introduced its long-term outlook two months ago, with very little concern expressed for the long-term outlook on services," Brian Alexander, analyst with Raymond James Equity Research said in a note on HP.

"We do not have a high degree of confidence or visibility that the execution of these changes will be crisp," he said.

Apotheker indirectly blamed the services unit's problems on Hurd, who left the company in August after the company accused him of filing inaccurate expense reports.

HP acquired the division when it bought Electronic Data Systems in 2008 -- a major initiative spearheaded by Hurd -- adding services ranging from help-desk support for PCs to advising corporations on rebuilding data centers to take advantage of new cloud computing technologies.

Cloud computing refers to the use of Web-based servers to deliver services to large businesses and organizations.

HP may offset the spending on the services unit by keeping a tight control on costs elsewhere.

"We will manage our costs very prudently ..., including our salary costs," Apotheker said. "We want to create enough resources to expand our business."

The company is not planning any job cuts but will watch its headcount, he added.

(Additional reporting by Jennifer Saba, and Angela Moon; Editing by Edwin Chan, Derek Caney, Richard Chang, Phil Berlowitz)

Dell's gross margin was 22.9 percent in the quarter, above the average forecast of 20.35 percent, driven by the strength in its enterprise business.

Revenue in the fiscal first quarter ended April 29 rose to $15 billion from $14.87 billion a year ago, but fell short of the average analyst estimate of $15.4 billion according to Thomson Reuters I/B/E/S.

Shares of Round Rock, Texas-based Dell jumped 5 percent in extended trading after closing down 0.63 percent at $15.90. The shares were initial halted in after-hours trading.

The better-than-expected results are in sharp contrast to larger rival Hewlett-Packard Co's, which disappointed investors by cutting its profit outlook, sending its shares down over 7 percent.

Dell still generates most of its revenue from selling personal computers but is moving to diversify its revenue base, given the weakened demand in the consumer PC market.

Dell wants to become a larger player in the data center equipment market and gain a toehold in the fast-growing mobile space with tablets and smartphones, but faces stiff competition in those markets from the likes of International Business Machines Corp and HP.

Dell reported a net profit of $945 million, or 49 cents a share, up from $341 million, or 17 cents a share, a year ago.

Excluding items, Dell earned 55 cents a share, handily beating the average estimate of 44 cents a share according to Thomson Reuters I/B/E/S.

(Reporting by Poornima Gupta; Editing by Richard Chang)

Corporate results from Home Depot Inc added further evidence of a decline in housing after the No. 1 home improvement chain noted poor weather hurt the spring selling season and sapped its sales.

Groundbreaking for new housing dropped 10.6 percent to an annual rate of 523,000 units, the Commerce Department said on Tuesday, as a glut of homes on the market discouraged new projects. March's starts were revised up to a 585,000-unit pace from the previously reported rate of 549,000 units.

The report pointed to prolonged weakness for the sector. Economists had forecast housing starts rising to a 568,000-unit rate. Compared to April last year, residential construction was down 23.9 percent, the largest decline since October 2009.

Starts in the South slumped to a two-year low.

"We're still struggling to find the bottom here for the housing market. It does not bode well for construction in the near term, and there's a good deal of overhang in terms of inventory," said Michael Woolfolk a senior currency strategist at BNY Mellon in New York.

A separate report showed the Japanese earthquake had hit U.S. manufacturing output, which fell 0.4 percent in April after 9 consecutive monthly increases, the Federal Reserve said. Overall industrial production was flat, buoyed by gains in mining and utilities.

Excluding cars and parts, manufacturing output rose 0.2 percent.

Capacity utilization, a measure of how close to flat out factories are running, fell unexpectedly in April, suggesting scant inflationary pressures in the world's largest economy.

Wal-Mart Stores Inc's, the world's largest retailer, said its U.S. business continues to struggle even as international sales held strong.

U.S. stocks fell on concerns about the economic recovery, while Treasury debt prices rose and the dollar firmed against a basket of currencies.

TOO MANY HOUSES ON THE MARKET

Residential construction is being crowded out by an oversupply of used homes on the market, in particular, foreclosed properties, which sell well below their value.

In March, the spread between the prices of new and previously owned houses was about $54,200.

Home builders' sentiment was flat in May, the National Association of Home Builders said on Monday.

Though builders expected a modest improvement in sales during spring, they anticipated market conditions to weaken in the next six months.

Residential construction accounts for about 2.2 percent of gross domestic product. Investment in home building contracted in the first quarter after a modest increase in the last three months of 2010.

Groundbreaking last month was depressed by a 24.1 percent tumble in the volatile multi-family homes sector, where starts for buildings with five or more units dropped 28.3 percent. Single-family home construction fell 5.1 percent.

New building permits dropped 4.0 percent to a 551,000-unit pace last month. March's permits were revised down to a 574,000-unit pace and economists had expected overall building permits in April to remain unchanged at the previously reported 585,000-unit pace.

Permits were held down last month by an 8.8 percent drop in the multi-family segment. Permits to build single-family homes slipped 1.8 percent.

New home completions rose 4.1 percent to 554,000 units in April.

(Additional reporting by Mark Felsenthal; Editing by Andrea Ricci)

By 4:38 a.m. EDT, futures for the S&P 500, Dow Jones futures and Nasdaq futures were up 0.1 to 0.3 percent.

The Nasdaq .IXIC fell 1.6 percent on Monday as investors sold recent gainers on the back of growing unease with parts of U.S. economic weakness.

The Dow Jones industrial average .DJI and the S&P 500 .SPX were off 0.4 and 0.6 percent, with a disappointing reading of manufacturing in New York state adding to the uncertain outlook for the economy.

Housing starts data is scheduled for release at 8:30 a.m. EDT, with economists predicting a rise to around 568,000 in April compared to 549,000 a month earlier.

Other data set for release includes April's industrial output figures at 9:15 a.m. EDT.

Earnings results will also be in focus, with Wal-Mart (WMT.N) expected to post a rise in profit to 95 cents from 87 cents a share this time last year, with the retailer's top priority firmly on turning around nearly two years of declining sales at U.S. stores open at least a year.

Home Depot (HD.N) is seen posting a rise in earnings per share to 49 cents from 45 cents a year ago, although investors will be wary after rival Lowe (LOW.N) reported weaker-than-expected quarterly results a day earlier.

Dell (DELL.O) also reports earning, along with rival Hewlett Packard (HPQ.N), which is set to bring forward its earnings release after reports its CEO had warned of a tough July quarter.

In company news, New York Attorney General Eric Schneiderman is investigating big banks like Bank of America Corp (BAC.N), Morgan Stanley (MS.N) and Goldman Sachs (GS.N) related to packaging of toxic mortgage loans into securities, the Wall Street Journal reported, citing sources.

BP's (BP.N) (BP.L) move to gain a foothold in Russia's offshore Arctic oilfields through a deal with state-controlled Rosneft (ROSN.MM) has collapsed after it failed to resolve a dispute with partners in TNK-BP (TNBP.MM).

Mining equipment maker Joy Global (JOYG.O) is to buy Rowan Cos Inc's (RDC.N) drilling and mining gear unit for $1.1 billion in cash, as it looks to offset stiff competition in its main market by entering the lucrative oil and gas drilling business.

On the economic front, The United States reached the legal limits of its borrowing authority on Monday as a top Republican increased his party's demand for deep spending cuts as part of any increase.

In a sign of caution ahead for Japanese growth, the Bank of Japan's Governor said the country's economy was in a very severe state due to damage from the March earthquake, signaling that the central bank was sticking to its loose monetary policy stance.

European shares on the FTSEurofirst 300 .FTEU3 were slightly lower in early trade, on track to fall for the fourth straight session.

(Reporting by Harpreet Bhal; Editing by Hans Peters)