* MSCI Asia ex-Japan rises 1.4 pct to 7-month high
* Euro, commodity currencies up as ECB cash injection awaited
* Copper, oil recover from earlier losses, weaker dollar lifts precious
* European shares likely to open flat to higher
By Chikako Mogi
TOKYO, Feb 29 (Reuters) - Asian stocks rose to a seven-month high while the euro and commodity currencies held their ground on Wednesday on hopes a fresh cash injection by the European Central Bank will help further temper market tension and underpin risk appetite.
Copper and oil recovered from earlier losses, while a weaker dollar supported precious metals.
The European Central Bank will likely inject about 500 billion euros ($670 billion) into the euro zone's financial system later on Wednesday to fight the regional debt crisis, enabling banks to tap as much of the ultra-cheap, 3-year loans as they like. It will be the second injection since December.
Financial spreadbetters expected major European markets
to open flat to 0.3 percent higher.
The euro was up 0.1 percent to $1.3474, just a tad below a 2-1/2 month peak of $1.3487 set on Friday, and was on track for a 3 percent gain this month, its best performance since October.
"Given the expectation we will see a generally healthy take up in the LTRO, it should keep risk assets well supported," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
"There is a slight risk that you might see a buy-on-rumour, sell-on-fact outcome," he added.
The MSCI Asia Pacific ex-Japan rose 1.4 percent to a seven-month high, supported by broad gains across the sectors, and was set for a monthly gain of 4.8 percent.
Asian stocks took a cue from overnight U.S. gains, when the S&P 500 rose above its March 2011 peak after U.S. consumer confidence hit a one-year high in February and suggested a recovery in the labour market.
Japan's Nikkei was up 0.3 percent, after rising as much as 1.5 percent to a fresh seven-month high, with banks among the top performers. Nikkei was on track for its best February in two decades.
Japanese fund managers in February raised their average equity allocations while cutting bond allocations from a record high hit the previous month, as monetary easing around the globe whet their risk appetite.
As a gauge of recovering risk appetite, commodity currencies rose, with the Australian dollar up 0.3 percent to $1.0808 , nearing a six-month high of $1.0845 hit in early February.
The dollar index measured against major currencies eased 0.2 percent.
"The biggest driver behind the swings in precious metals prices is the change in the dollar's relative value against other currencies," said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.
Spot gold hit a fresh three-month high around $1,790 an ounce on Wednesday, while spot silver held steady around $36.90 an ounce after surging more than 4 percent and reaching a five-month high of $37.21 in the previous session, benefiting substantially from the global easy policy.
The relative strength index for silver stood above 77 at its highest since April, showing the market has become overbought.
"Silver looks more positive than gold for the time being, but it's not related to rising physical demand," said a Hong Kong-based dealer.
Expectations that the ECB's cheap loans will spur buying of riskier assets helped oil and copper erase earlier losses.
Copper edged up 0.2 percent to around $8,615 a tonne, retreating from two-week highs but off day's lows.
U.S. crude oil futures were up 0.4 percent to $107 a barrel, while Brent crude rose 0.6 percent to $122.28 a barrel. Oil prices posted the sharpest drop in 2-1/2 months on Tuesday.
The drop in oil prices helped ease concerns that rising energy costs, fed by tensions over Iran's nuclear program and other supply-related issues in the Middle East, would hurt the global economy.
Following the ECB's cash injection, market attention will turn to U.S. Federal Reserve Chairman Ben Bernanke's semi-annual testimony on monetary policy before the House Financial Services Committee due at 1500 GMT.