* MSCI Asia Pacific ex-Japan rises 1.6 pct, Nikkei ends up 2.3 pct * Euro firms as dollar index slips * European shares seen opening modestly lower * Oil, gold steady By Chikako Mogi TOKYO, Nov 29 (Reuters) - Asian shares and the euro extended a rally into a second day on Tuesday, as investors were buoyed by expectations that European policy makers will outline details of how they will leverage a bailout fund so as to avert contagion in sovereign debt markets. MSCI's broadest index of Asia Pacific shares outside Japan rose 1.6 percent, adding to Monday's jump of more than 2 percent. The index hit a seven-week low last Friday. Japan's Nikkei closed up 2.3 percent, moving further away from two-and-a-half year lows also hit last week. U.S. stocks snapped a seven-session losing streak on Monday, partly supported by robust holiday sales, helping to buoy some Asian markets with export exposures to the United States, such as Korea and Taiwan, while defensives and beaten-down energy and materials sectors pulled Hong Kong and Shanghai shares higher. "Some positive sentiment hit the markets which, after a recent steep decline, were offering good valuations and encouraging temporary buy back," said Hirokazu Yuihama, senior strategist at Daiwa Capital Markets. Asian markets largely shrugged off a French media report citing several sources as saying Standard & Poor's could change the outlook of France's top-notch rating to "negative" within the next 10 days, but European share markets were set to dip. Financial spreadbetters expected Britain's FTSE 100 and Germany's DAX to open down 0.1 percent, and France's CAC-40 to open down 0.4 percent. Euro zone finance ministers will meet later on Tuesday to approve detailed operational rules for the region's bailout fund, the European Financial Stability Facility (EFSF), paving the way for the 440 billion euro facility to draw cash from investors. But with a history of initiatives that fall short of market expectations, analysts at Barclays Capital warned it would be premature to be confident that Europe's leaders are close to a solution to the 2-year-old debt crisis. "So far, European summits have delivered compromise solutions that have been deemed either less than credible or too complex by markets," they said in a note. "The recent round of proposals does not seem any different and suggests that investors should exercise caution buying risky assets, especially after a rally that has been aided by light market positioning." ITALY AUCTION IN FOCUS The MSCI world equity index jumped 3.1 percent on Monday while U.S. stocks snapped a seven-session losing streak, with both the Dow Jones industrial average and the Standard & Poor's 500 Index up nearly 3 percent. Germany and France are reportedly working on proposals for a more rapid fiscal integration in Europe ahead of a European Union summit on Dec. 9, but the European Central Bank has defied calls for a stepped-up role in helping resolve fiscal problems within the 17-member euro zone. Concerns about the ability of the highly-indebted euro zone countries to pay off their ballooning public debt have made their sovereign bonds a prime target for market attacks, pushing yields to levels widely seen as unsustainable. Market players were closely watching the outcome of this week's auctions, with up to nearly 19 billion euros in new bonds expected to be issued by Belgium, Italy, Spain and France. Italy plans a 8 billion euros bond sale later on Tuesday. Ten-year bond yields were stuck above 7 percent, a level that forced Greece, Ireland and Portugal to seek international aid. Tension in euro zone money market and banks' reluctance to lend to each other further intensified on Monday, with three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, rising to 1.477 percent from 1.475 percent.

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