European leaders will discuss boosting the firepower of the euro zone rescue fund at the summit, the Financial Times reported citing senior European officials.

The report and some degree of optimism supported Asian stocks and the euro on the day after they were hurt by Standard & Poor's threat to downgrade the credit ratings of euro zone members.

Asian currencies "would have room to rise more" if the EU summit meets expectations and produces any positive surprises, said Saktiandi Supaat, head of FX Research at Maybank in Singapore.

Any moves toward European fiscal integration and for support from the ECB would be positive, he said.

Supaat said he did not expect major movement of funds to Asia yet, though it could happen next year. Also, he said, "we never know what can happen, with EU officials thus far not really seeming to be committed to resolve this in a thorough and holistic manner."

Any disappointment with the summit could pull risky assets including emerging Asian currencies down again as they have reflected hopes for progress, dealers and analysts said.

European policymakers have disappointed markets many times before.

"Until the EU summit, the risk is to the upside on hopes for a European breakthrough," said Dariusz Kowalczyk, senior economist and strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

"There are big downside risks in case of disappointment. They (emerging Asian currencies and risky assets) are pricing in hopes for a successful summit, which makes them vulnerable in case Europe disappoints, especially the won."

The South Korean currency on Wednesday outperformed its Asian peers.

WON

Dollar/won slid in thin trading as interbank speculators reduced dollar holdings.

The pair may fall more on exporters' supplies for settlements, but players were reluctant to sell it more before the European summit.

"Preference for long positions is getting weaker on some hope on Europe. But I doubt how much it would fall as market positions are not seen as that heavy," said a foreign bank dealer in Seoul.

Investors will follow the Bank of Korea's policy meeting on Thursday, at which the central bank is expected to maintain interest rates.

PHILIPPINE PESO

Dollar/Philippine peso fell as some traders sold the pair amid hope for euro zone progress but trading was subdued, dealers said.

"No one would dare to push it in either way," said a European bank dealer in Manila.

The dealer said he would buy the pair around 43.20 and sell it around 43.50.

RINGGIT

Speculators sold dollar/ringgit in thin trading and the pair extended its slide with a higher euro.

Traders did not make big bets before the European summit on Friday and the European Central Bank's policy meeting on Thursday.

"We followed the euro and the Aussie dollar today like a puppy. But I won't add short dollar positions until I see concrete progress in Europe," said a Kuala Lumpur-based dealer.

BAHT

Dollar/baht fell on inflows to Thai stocks and bonds.

Foreign investors were net buyers of Thai stocks in five consecutive sessions between Nov 29 and Dec 6, purchasing a combined net $262 million.