* Investors hunt for new growth drivers as recovery priced in
* Shanghai stocks jump 2.2 pct, positive on week
* U.S. crude fails to hurdle $75, hovers at $72
* Yen, dollar slip
By Kevin Plumberg
HONG KONG, Aug 26 (Reuters) - Japanese stocks rose to a 10-month high on Wednesday, driven by a modest shift into defensive sectors, while stocks in Shanghai turned positive on the week as investors cheered corporate results.
Thin summer trading volumes, however, kept prices choppy and markets generally remained in ranges.
Major European stock futures were down 0.2 percent after the cash market closed at the highest since early October, while U.S. stocks futures were up 0.4 percent set to extend gains after U.S. single-family home prices grew for a second straight month.
The Ifo survey of German business sentiment is expected to show an across the board pickup later on Wednesday, playing into the story that recoveries are taking hold around the world.
"There's no mistake that the economy is on a recovery track from both the macro and micro perspective, and the market is in an upward trend," said Junichi Misawa, senior fund manager at STB Asset Management in Tokyo.
Still, having already priced in an upturn in the global economy, investors were looking for more signs that growth can be sustained once the impact of massive government stimulus spending fades.
Volatility in Chinese shares has also kept investors guessing. The Shanghai composite index rose 2.3 percent on Wednesday but has still lost around 13 percent so far in August, on track for its biggest monthly decline since the darkest month of the financial crisis in October 2008.
The precipitous move has triggered questions on whether other high flying equity markets were due for a correction.
Japan's Nikkei share average closed up 1.4 percent, at the highest since October 3.
Shares of index heavyweight Toyota Motor Corp rose 1.5 percent on a report the carmaker would cut global production capacity and post an operating profit in the 2010 financial year.
However, while news of the capacity cut shored up the stock, it also reinforced worries about persistent weakness in global consumer demand, which is key to a solid recovery.
Japan's exports slipped in July as annual declines in exports to the United States and China accelerated, a sign that the impact of stimulus measures in major economies worldwide may be starting to wane.
"Things have stopped getting worse, but a return to trend gains in production and trade is a pipe-dream," Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, said in a note.
Traders will be watching U.S. durable goods orders and new home sale data later on Wednesday for more clues on whether consumers are ready to start spending again.
SHANGHAI STOCKS JUMP 2 PCT
The MSCI index of Asia Pacific stocks traded outside Japan rose 0.3 percent Weakness in the technology and consumer discretionary sectors -- two of the most expensive segments of the Asian market -- kept the broader market in check.
Hong Kong's Hang Seng index was up 0.5 percent but remained susceptible to ups and downs in the Shanghai market.
U.S. oil futures for October delivery were largely unchanged on the day around $72 after a 3 percent drop overnight on profit taking after the market was unable to push crude above $75 a barrel. Brent was also steady at $71.81
Inventory data from the American Petroleum Institute late on Tuesday showed a big buildup in U.S. crude oil stocks last week, keeping a lid on the market.
Still, that appeared to be only a short-term setback. Analysts raised their 2010 median price forecast for a fifth straight month to $73.39.
The Australian dollar inched up 0.4 percent to US$0.8357 and has been less reactive this week to Chinese stock market moves. Earlier in August, sudden drops in the Shanghai market sucked the Australian currency down with it.
The ICE Futures U.S. dollar index, which gauges its value against a basket of six other major currencies, was steady on the day and hardly changed in August.
Investors are eager to know if the dollar will resume a downward trend in September, as more dealers return from holiday and trading volumes pick up. (Additional reporting by Aiko Hayashi in TOKYO) (Editing by Kim Coghill)