Sydney - Asian shares got a welcome reprieve from selling on Wednesday as Wall Street steadied and investors in emerging markets found some backbone, which took some of the starch out of safe-haven bonds and the yen.
Still, the gains were modest and dealers cautioned that the mood remained brittle and it would only take a poor US payrolls report on Friday to set the bears running again.
For now, the Nikkei managed to rally 1.5 percent to 14,221 after a couple of days of punishing selling. But it faces stiff resistance at the 200-day moving average of 14,425, while there is a large gap to fill between Monday's close and Tuesday's opening.
The index had shed 14 percent since the start of the year following last year's 50 percent boom.
MSCI's broadest index of Asia-Pacific shares outside Japan eked out a 0.16 percent gain, while South Korea added 0.5 percent.
On Wall Street, the Dow ended up 0.47 percent, while the S&P 500 added 0.76 percent and the Nasdaq 0.86 percent. The bounce helped pull MSCI's world index from its lowest level since October.
Europe's top shares pared early losses to end 0.17 percent lower.
The modest improvement in risk appetites led to a pullback in the yen and Swiss franc, and a generally firmer US dollar. The greenback edged up to 101.58 yen, having found solid support at its 100.75 trough.
The euro eased a touch to $1.3515, still dogged by speculation that the threat of deflation might nudge the European Central Bank into easing policy at its meeting on Thursday.
The major mover in currencies was the Australian dollar which surged after the country's central bank on Tuesday shut the door on further rate cuts, citing a pick-up in housing and consumption and higher than expected inflation.
The Aussie was enjoying the view at $0.8910 after climbing a steep 2 percent overnight. It also rallied sharply on the euro and yen as speculators were forced to cut short positions in what had been a very crowded trade.
The New Zealand dollar got its own boost when jobs data showed strong employment growth for the fourth quarter of last year, adding to the already considerable case for a hike in interest rates.
Currencies in emerging markets also bounced from recent lows with the Turkish lira, Brazilian real and South African rand all gaining.
The pullback in safe havens saw US 10-year Treasury yields shoved up to 2.62 percent, from a low of 2.57 percent. Gold gave back some ground to stand at $1,253.20 an ounce.
In commodities, prices for wheat were boosted by dry weather and declining crop conditions in the United States, while soymeal and corn were in high demand.
Broad gains in grains and natural gas lifted the Thomson Reuters/Core Commodity Index 1 percent, the biggest one-day gain in nearly a month.
US oil futures rose on bets on a reduced stockpile at a key delivery point due to the start-up of a major pipeline. The March NYMEX contract added 51 cents to $97.70 a barrel, while Brent crude eased 4 cents to $106.00. - Reuters