* Asian stocks track Wall Street higher, yen broadly lower
* All eyes on whether Washington can agree on a debt deal
* Some progress seen, but situation still very fluid
* European stocks seen rising for a second session
By Ian Chua
SYDNEY, Oct 11 (Reuters) - Asian stocks jumped to three-weekhighs on Friday as investors took a chance and cheered perceivedprogress in Washington to avert a possible debt default, eventhough questions remained over whether a deal could be struck inthe next week.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent, reaching highs not seen sinceSept. 19. Tokyo's Nikkei climbed 1.2 percent.
The region's emerging markets also rose, with Chinese and Indian shares both up around 1.0 percent.MSCI's broad emerging benchmark equity index put on0.7 percent.
Financial spreadbetters expect Britain's FTSE 100 toopen up by 41-43 points, a rise of 0.7 percent. Germany's DAX was seen opening 53-60 points higher, also a 0.7percent gain.
The rally in Asia came after U.S. stocks jumped morethan 2 percent in their biggest one-day gain since Jan. 2 asinvestors became more confident that squabbling U.S. politicianswould at the very least avert a possible U.S. debt default nextweek.
"The situation is fluid but it seems like progress is beingmade on averting the worst-case scenario. But a short-termsolution should be met with short-term enthusiasm," analysts atNomura wrote in a client note.
Republican lawmakers, who have not passed budget funding, onThursday offered a plan that would extend the U.S. government'sborrowing authority for several weeks, staving off a defaultthat could otherwise come as soon as Oct. 17.
While no deal emerged from a meeting at the White House, thetwo sides appeared ready to end a political crisis that hasshuttered much of the U.S. government and pushed the countryclose to default.
"We are watching this very closely like everyone else. Somepeople have been going into cash. I wish we were all focusing onmatters of economics and earnings, but we are unfortunatelytrading on this soap opera," said Michael Cuggino, president andportfolio manager at Permanent Portfolio Funds.
In currency markets, the 'risk-on' mood is clearly reflectedin the yen, which sagged across the board, particularly againsthigher-yielding currencies such as the Australian dollar.
The Aussie climbed 0.5 percent to a three-week high of 93.44yen. For some traders, the Aussie/yen cross is seenas a risk barometer.
The dollar and euro rose to respective 1-1/2 week highs of98.56 yen 133.45.
The euro was steady at $1.3535, holding the dollarindex, which tracks the greenback's performance against abasket of major currencies, under a two-week high set overnight.
Gold nursed losses, struggling to pull away from aone-week low of $1,282.36 an ounce.
Copper put on 0.1 percent to $7,153.00 a tonne,adding to Thursday's 0.6 percent rise, while U.S. crude eased 0.3 percent to $102.70 a barrel, following a 1.4 percentrally.
Traders warned the U.S. fiscal crisis remained fluid and anysetback in resolving it could see markets quickly turn tail.
"In the interim, fourth-quarter GDP will surely feel theadverse effects from the slowdown in economic activity and thelack of transparency with respect to economic data releases,"said Bonnie Baha, senior portfolio manager at DoubleLine Capitalin Los Angeles.
"As a result, under the current set of circumstances, theprospect of a QE tapering is almost certainly off the table for2013," she added, referring to the Federal Reserve's bond-buyingstimulus programme known as Quantitative Easing.
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