HONG KONG (AFP) - Asian markets rose Wednesday and Italian bond yields fell from record highs after Italian leader Silvio Berlusconi promised to quit, lifting hopes that Europes debt crisis can be contained. Adding to buying sentiment was data out of China showing that the countrys inflation had slowed sharply last month, raising the prospect that the government could start to ease monetary policy. Tokyo was 1.15 percent, or 99.93 points, higher at 8,755.44 while Sydney closed 1.22 percent, or 52.3 points, higher at 4,346.1 and Seoul gained 0.23 percent, or 4.39 points, to 1,907.53. In the afternoon Hong Kong was up 1.79 percent and Shanghai added 0.19 percent. Berlusconis hand was forced after his coalition lost its parliamentary majority in a procedural vote on budgetary legislation. The 75-year-old prime minister said he would step down once a key austerity budget has been passed. The yield on 10-year Italian bonds fell to 6.65 percent in Asian hours, well down from the record 6.77 percent seen before his announcement. The record-high cost of borrowing for Italy, the eurozones third largest economy, was higher than the levels that triggered bailouts for smaller eurozone members. Risk appetite is improving, with investors favouring cyclicals over defensives amid relief that Berlusconi is stepping down, said CBA institutional equities head of sales Justin Rooney in Sydney, according to Dow Jones Newswires. Markets have been punishing Italy for weeks over what is seen as Romes inability to make necessary changes to balance the budget and keep on top of its debt, which is equal to 120 percent of gross domestic product. However, Credit Agricole warned in a note that with yields still dangerously close to the 7 percent level, the euro will stay under pressure and markets on edge until political deadlock in Italy and Greece is resolved. Berlusconis move came days after George Papandreou, the Prime Minister of debt-weary Greece, said he would step aside and allow a unity government to take over in a bid to drag the country out if its financial mess. In afternoon Asian trade Wednesday the euro fetched $1.3833 and 107.21 yen in Tokyo trade against $1.3836 and 107.50 yen in New York late Tuesday. The dollar edged down to 77.56 yen from 77.70 yen. The news from Rome sent Wall Street into positive territory after it spent the day in the red. The Dow rose 0.84 percent, the Nasdaq added 1.20 percent and the S&P 500 added 1.17 percent. Beijing said Wednesday morning that its consumer price index a key gauge of inflation rose 5.5 percent year-on-year, its slowest pace since May, after more than a year of monetary tightening measures. The figure is well down from the three-year high of 6.5 percent posted in July, and boosted hopes the government will ease up on liquidity restrictions. On oil markets New Yorks main contract, light sweet crude for delivery in December, gained 34 cents to $97.14 per barrel in the afternoon. Brent North Sea crude for December delivery advanced 45 cents to $115.45. At 0620 GMT gold was at $1,786.70 an ounce against $1,795.30 late Tuesday. In other markets: Taipei dipped 0.51 percent, or 38.93 points, to 7,561.86. HTC rose 0.77 percent to Tw$655.0 while Taiwan Semiconductor Manufacturing Co was 0.54 percent lower at Tw$74.1. Manila gained 0.73 percent, or 31.53 points, to 4,346.20. Jollibee Foods rose 5.7 percent to 95 pesos, Metro Pacific Investments added 3.6 percent to 3.38 pesos and Ayala Land gained 1.0 percent to 15.90 pesos. Wellington closed flat, edging up 2.33 points to 3,353.56. Telecom Corp. was unchanged at NZ$2.69, Fletcher Building slipped 0.6 percent to NZ$6.48 and Air New Zealand rose 0.5 percent to NZ$1.06.