Tokyo - Asian shares shrugged off early losses on Tuesday, as rallying Chinese shares and Wall Street's record close offset euro worries over Greece's fiscal woes.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent. The CSI300 index surged 3.1 percent and the Shanghai Composite Index rose 2.6 percent.
Japan's Nikkei stock index added 0.7 percent, rising to a three-week high, while the Topis added 0.5 percent.
“When risk appetite recovers investors start to pay more attention to stock valuations,” said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Centre. “About 40 percent of the Topix components are below their book value, so in the mid-term, people may pick up such stocks.”
Both the Dow Jones industrial average and the S&P 500 closed at record highs, the third straight day for the latter, after lacklustre economic data raised hopes that the US Federal Reserve would hold off raising interest rates.
The National Association of Home Builders said its index of members' sentiment fell to 54 points in May from 56 in April, short of a forecast increase to 57 among economists polled by Reuters.
Some investors were wary of which scenario to fear most: The Federal Open Market Committee tightening monetary policy, or the US economy deteriorating to the point where a rate hike was indefinitely delayed.
“The FOMC's biggest worry is not lift off and its market and economic implications, but what happens if the economic recovery dies of old age without the Fed having done anything to tighten,” Steven Englander, global head of G10 FX strategy at CitiFX in New York, said in a note to clients.
“Right now the rates market builds in very gradual policy rate normalisation, with increasing uncertainty about the date of lift off,” he said.
US Treasuries sank as stocks gained, and higher yields underpinned the dollar. The yield on benchmark 10-year Treasuries notes rose to 2.237 percent from its US close on Monday of 2.228 percent.
The euro, which jumped to nearly four-month highs against the dollar last week, skidded more than 1 percent on Monday. It was last down 0.2 percent on the day at $1.1297.
Fears of a Greek bankruptcy persisted even as the country's finance minister said on Monday that it was close to a deal with its lenders that would help it meet debt repayments next month.
The dollar was steady on the day against its Japanese counterpart at 119.95 yen.
Expectations of more easing from the Bank of Japan kept the Japanese currency in check. The BOJ is seen expanding its massive stimulus programme in October, according to most economists polled by Reuters - even though Governor Haruhiko Kuroda has said there is no need to do so.
US crude futures edged up after slipping on Monday on the stronger dollar and oversupply concerns triggered by Saudi Arabia's report of its highest exports in nearly a decade. US crude rose about 0.1 percent in Asian trade to $59.47 a barrel, while Brent fell 0.2 percent to $66.13.
Spot gold edged down 0.2 percent to $1,221.83 an ounce a day after it scaled a three-month high after disappointing US economic data quashed expectations that the Fed would hike interest rates anytime soon.
Reuters