Stock market indexes rose Wednesday in Japan and Australia and the yen steadied as investors edged away from safety plays on hopes that a salvaged Wall Street rescue plan in Washington would stabilize banks and financial markets.

European stocks also rose ahead of a vote in the U.S. Senate on a $700 billion plan for the government to buy illiquid mortgage- backed securities. The political drama over the rescue package has whipsawed markets this week.

Expectations that Congress would pass something soon drove a 5.3 percent rise Tuesday in the Standard & Poor's 500-stock index, erasing more than half of the market plunge Monday after the House of Representatives rejected the plan.

"Investors here already bet for the resumption of bailout talks yesterday, and we are seeing market participants taking a more cautious stance today ahead of the vote tonight," said Kim Hyoung Ryoul, a market analyst at NH Investment & Securities in Seoul.

The fight over the biggest effort yet by the U.S. government to support the financial system comes at a time when money markets are dysfunctional and banks are refusing to lend to each other, clogging the flow of credit and potentially endangering the global economy. Central banks have been providing billions of dollars in liquidity, essentially putting the global financial system on life support and hoping confidence will return to the shattered banking industry.

In Japan, the Nikkei share average climbed 1 percent Wednesday after posting its biggest monthly decline in 8 years during September. Shares in Canon rose 4.2 percent and were one of the biggest supports to the index on Wednesday.

The Australian benchmark, the S&P/ASX 200 share index, advanced 4.2 percent but was not far above its lowest level since November 2005, hit only two weeks ago.

Shares of the mining group BHP Billiton shot up 4.4 percent and Rio Tinto's stock jumped 11.2 percent after an Australian regulator cleared BHP's proposed purchase of Rio.

Many Asian markets were closed for holidays, including China, Hong Kong and Singapore.

Taiwanese stocks snapped a four-day losing streak with a 0.8 percent rise, while South Korean shares ended 0.6 percent lower and Indian stocks gained 1.5 percent.

The dollar was steady in Asian trade at yen105.98. The dollar briefly touched a four-month low against the yen on Tuesday, but later surged as U.S. investors brought money back home from overseas investments and optimism rose about the U.S. bailout plan in Congress.

The euro was down 0.1 percent at $1.4105 after dropping 2 percent Tuesday. European countries scrambled to support the banking system, struggling under the weight of collapsed confidence and sluggish lending conditions.

France joined Belgium and Luxembourg in injecting euro 6.4 billion into Dexia, a lender based in Brussels and Paris, while the Irish government backed all its banks, with insurance covering all deposits.

"The recent interventions are likely to weaken European government balance sheets, which would be a negative in the long- term," Ashley Davies, a UBS currency strategist in Singapore, said in a note.

Short-term money markets, however, still reflected elevated levels of stress. On Tuesday, the spread between three-month London interbank offered rates and overnight index swap rates widened to records in dollars, pounds and euros. The spread is critical in determining credit market conditions because it reflects the premium the market demands over anticipated benchmark central bank interest rates.

The unwinding of trades because of fears about the impact of the financial crisis on the global economy pushed up oil prices, with U.S. light sweet crude for November delivery rising $1.28 to $101.94 a barrel. Spot gold gained 1.1 percent to around $879.30 an ounce after dropping 4 percent in New York on Tuesday in its biggest one- day percentage fall since August.

Originally published by Reuters.

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