Upbeat Chinese trade and inflation data lifted Chinese shares to three-month highs and boosted regional shares on Monday, while Japanese shares rallied and the yen dropped after Tokyo won its bid to host the 2020 Summer Olympics.
The dollar licked its wounds and U.S. debt yields were off two-year highs after a disappointing U.S. jobs report on Friday, which raised speculation the Federal Reserve may minimise the size of a likely reduction in stimulus many investors expect later this month.
European shares are expected to open slightly firmer, with both Germany's DAX and Britain's FTSE seen rising about 0.1%, though concerns about U.S. intentions to strike Syria over its alleged use of chemical weapons could cap the gains.
Mainland Chinese shares surged after Chinese August inflation data added to optimism following solid trade figures published on Sunday.
The CSI300 index of the leading Shanghai and Shenzhen A-share listings jumped 3.4%, hitting its highest level since early June.
"Market sentiment has been turning more and more positive, with the A-share market strong. But there's still not a lot of fresh buying," said Jackson Wong, Tanrich Securities' vice-president for equity sales.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9%, with both Hong Kong's Hang Seng Index and Seoul's Kospi hitting their highest level in about three months.
China's exports grew 7.2% in August, above market expectations of a 6.0% rise from a year earlier.
That was followed by data showing consumer inflation held steady in August while producer price deflation continued to ease, another sign of a stabilising economy.
Investors are bracing for more data from China including industrial production and retail sales on Tuesday.
Japan's Nikkei share average gained 2.5%, hitting a one-month high as investors bet hosting the Olympics would boost the economy — through construction and higher prices — by 3 trln yen ($30 bln) over the coming seven years.
"In the short-term, this (Olympics-bid win) will be positive mainly through a boost on Olympic-related shares," said Ryota Sakagami, chief equity strategist at SMBC Nikko Securities in a report.
"In the longer run, its impact depends on how much the government can push for infrastructure investments and promotion of tourism business but it is likely to be positive for the Japanese economy and shares," he said.
TAPERING
But investors are also grappling with worries that withdrawal of the Fed's stimulus could destabilise asset prices worldwide.
Despite the soft job data, most U.S. primary dealers expect the Fed to announce at its next policy meeting September 17 and 18 that it will cut the extent of its bond purchases.
Others think the Fed could trim its monthly bond buying from the current $85 bln to an even more modest $5 bln.
The ten-year U.S. Treasury yields stood at 2.940%, off a two-year high just above 3% hit on Friday.
The dollar index stood at 82.25 , steadying from Friday's 0.6% fall. The euro fetched $1.3175, off Friday's seven-week low of $1.31045.
Against the yen, the dollar briefly rose to as high as 100.11 yen thanks largely to its strong correlation to Japanese shares, but quickly gave up gains on profit-taking to stand at 99.65 yen for a gain of 0.5% from late last week.
