TOKYO - Asian shares rose on Wednesday, but gains were capped by a cut to Spain's sovereign credit rating from Moody's Investors Service that kept investors' risk appetite in check.

A rise in US stocks and a report that Europe will strengthen the region's rescue fund helped improve sentiment, with spreads over a key Asian credit default swaps index narrowing several basis points.

But bearish technicals remained in place to suggest investors were still wary about buying riskier assets.

"It's a familiar pattern these days, to sell stocks whenever there's bad news from Europe and buy them back whenever there's good news, but investors are getting tired of it," said Kenichi Hirano, operating officer at Tachibana Securities, adding that this was one reason for recent thin trade.

MSCI's broadest index of Asia Pacific shares outside Japan rose 0.5 percent, while the Nikkei stock average opened up 0.8 percent.

Moody's, one of the big three ratings agencies, on Tuesday cut Spain's sovereign ratings by two notches, saying high levels of debt in the banking and corporate sectors leave the country vulnerable to funding stresses.

The latest step followed Moody's warning on Monday over risks for France to maintaining its top credit rating.

A report on Tuesday by Britain's Guardian newspaper that France and Germany had agreed to boost a euro zone financial rescue fund to 2 trillion euros was later denied by a senior euro zone source, who told Reuters there had been no mention of such a deal.

The MSCI world equity index ended up 0.21 percent on Tuesday, as US stocks rose following the euro zone report, which saw big banks rally despite disappointing results.

Banks' earnings underscored the damage inflicted by the global financial turmoil, with Goldman Sachs Group Inc  posting its second quarterly loss as a public company on Tuesday as its investment portfolio lost billions of dollars in value.

Bank of America Corp posted a third-quarter profit on accounting gains, but its main businesses struggled as income from lending and investment banking fell.