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GLOBAL MARKETS-Stage set for relief rally in Asia as Washington deal nears

* Deal to end U.S. fiscal impasse and avert default nears

* Wall Street rallies, Asian stocks set to follow barring any last-minute glitches

* Australian dollar hit four-month highs as risk appetite grows

By Ian Chua

SYDNEY, Oct 17 (Reuters) - Australian shares opened higher on Thursday, setting the stage for a relief rally in Asia with Washington on the cusp of securing a deal to lift the government's borrowing limit and avoid a historic default.

U.S. Senate leaders hammered out an agreement to break the fiscal impasse late on Wednesday, paving the way for U.S. lawmakers to end the drama in Washington just hours before the government exhausts its borrowing authority.

If it goes without a hitch, the deal should pass through Senate, then the House of Representatives, before President Barack Obama signs it into law.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent in early trade as Australia's S&P/ASX 200 index climbed 0.4 percent.

U.S. S&P 500 e-mini futures were little changed, taking a breather after a 1.2 percent rally.

Wall Street closed more than 1 percent higher on Wednesday on signs that a resolution was imminent, bringing the S&P 500 index within striking distance of a record high set last month.

The deal, however, does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until Jan. 15 and raises the debt limit through to Feb. 7, so global markets face the possibility of another showdown in Washington early next year.

"The can has been kicked further down the road... the reset button has been pushed and we will go thought this all again in two months time," said Evan Lucas, market strategist at IG in Melbourne.

But Lucas expected "normal trading" to return over the coming days as the earnings season kicks into gear.

The breakthrough couldn't have come at a better time for companies including Malaysia's UMW Oil & Gas, South Korea's Hyundai Rotem and the Philippines' Travellers International, which plan to raise about $1.7 billion in the IPO market. The deals are expected to be priced later on Thursday.

In the currency markets, the improved risk appetite saw investors favour high-yielding currencies including the Australian dollar.

The Aussie dollar hit a 4-month high of $0.9574 and scaled a 4-1/2 month peak of 94.46 yen.

The dollar index , which tracks the greenback's performance against a currency basket, was steady at 80.517, having reached a one-month high of 80.745 overnight.

Many traders are already trying to get past the fiscal drama and looking to see when a backlog of U.S. economic data including the September payrolls will be released once the partial government shutdown is lifted.

Once the antics are over in Washington, the markets will likely re-focus their attention on the economic releases and the timeline for the U.S. Federal Reserve's tapering of its bond-buying programme - a major driver of global assets in recent months.

The Fed stunned markets last month by electing to delay the start of the stimulus reduction.