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TOKYO - Asian shares climbed to their highest level in seven months on Tuesday on fresh hopes the global recession is easing, and oil hovered at six-month peaks as supply concerns helped buoy up prices.

The dollar struggled, as did the yen, after both tumbled the previous day when a 3 percent gain in U.S. shares boosted investor confidence that the global downturn may be slowing, encouraging buying in commodity currencies and other majors.

In Tokyo, the benchmark Nikkei average <.N225> rose 2.8 percent, with exporters such as Canon Inc <7751.T> helped by the yen's retreat after a top finance ministry official gave a warning about recent yen strength and its impact on the economy.

But analysts were cautious ahead of data on Japan's gross domestic product on Wednesday, which is forecast to show the world's second-largest economy contracted 4.2 percent in January to March, likely its worst quarterly contraction since World War Two.

"Nobody really wants to take on new risk ahead of this," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

"At the same time, there's a bit of risk from currency movements, and while the dollar recovered yesterday against the yen on a Japanese official's comments amounting to verbal intervention, these gains are shaky."

U.S. stocks rallied on Monday as better-than-expected results from the No. 2 U.S. home improvement retailer, Lowe's Cos Inc , helped spark broad-based buying on hopes consumer spending is stabilizing. A revival in badly battered U.S. consumer confidence is key to a broader global recovery.

The Dow Jones industrial average <.DJI> gained 2.85 percent to 8,504.08, the Standard & Poor's 500 Index <.SPX> rose 3.04 percent to 909.71 and the Nasdaq Composite Index <.IXIC> advanced 3.11 percent. S&P futures were steady in Asian trade.

POSITIVE BUT CAUTIOUS

Officials at the World Bank, European Central Bank and U.S. Treasury also offered cautiously upbeat comments, with Treasury Secretary Timothy Geithner saying the U.S. economy had "clearly stabilized" although he warned things would remain "bumpy."