Tokyo - Asian stocks moved further away on Monday from four-year lows struck last week, as the blizzard on the US East coast pushed oil prices higher, relieving some of the bearish pressure on Wall Street and world markets.
Global equities also took heart from the European Central Bank signalling last week additional monetary easing steps to come, raising hopes that other central banks, like the Bank of Japan, would take the same path.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent, putting further distance between a four-year low plumbed last week.
Shanghai stocks added 0.9 percent, Tokyo's Nikkei rose 1.1 percent and Australian shares advanced more than 1 percent to a 10-day peak.
“The latest rebound in oil, combined with European and Japan central bank's hinting at further stimulus, has provided a short-term reprieve for what so far this year, can be described as a nervous and punishing market,” said Gary Huxtable, client adviser at Atlantic Pacific Securities.
On Friday, the S&P 500 rose 2 percent and the Dow added 1.3 percent on Friday as a cold snap in North America and Europe caused a rally in oil prices. The S&P energy sector surged 4.3 percent.
Both the Federal Reserve and Bank of Japan hold policy meetings this week, with the Fed meeting on January 26-27 and the BOJ meeting immediately after, on January 28-29.
Investors will look for any hints of when the Fed intends to make a second interest rate hike, while there is speculation that the BOJ could opt to take additional easing measures.
“We expect no action from the Fed or BOJ, although investors will be looking for a more dovish forward bias as the renewed decline in oil prices lowers inflation expectations globally,” wrote strategists at Barclays.
Risk aversion amid fears of a China-led global slowdown and oil prices sinking to 13-year lows had rocked global markets at the start of the year, and the lull in flight-to-quality seen towards the end of last week weighed on safe havens like US Treasuries and the Japanese yen.
The benchmark 10-year Treasury yield nudged up to 2.05 percent after rising to as high as 2.089 percent on Friday, the highest in a week.
The dollar was steady at 118.795 yen after surging 0.9 percent on Friday, when it touched a two-week high of 118.88. The euro was little changed at $1.0801 after losing 0.8 percent on Friday.
The Australian dollar, sensitive to the ebb and flow in risk appetite and fluctuations in commodity prices, traded at $0.7002 after touching a nine-day high of $0.7046 on Friday.
Crude, recently under pressure from a global glut, jumped percent as harsh winter weather on the US East coast boosted demand for heating oil. US crude climbed 9 percent and Brent bounced 10 percent on Friday.
US crude was last up 0.3 percent at $32.29 a barrel. The contracts had descended to as low as $26.19 last week, their lowest since May 2003. Brent crude rose 0.2 percent at $32.24 a barrel.