Asian shares pushed up for a second day on Wednesday, with Taiwan's benchmark index nearing a 16-month high, as growing confidence in a strengthening global recovery boosted resource and financial companies.
European shares, however, were set for a sluggish start, with futures on the Euro Stoxx 50 index little changed in early trade.
Gold trimmed some gains but hovered near the all-time high of $1,043.45 hit on Tuesday, highlighting the dollar's woes after the U.S. currency was hit the previous day by a report that major countries were looking at alternatives to the greenback for settling oil trades, including gold and other currencies.
The report was later denied by some of the countries said to be involved.
U.S. crude oil prices rose 59 cents a barrel to $71.46, adding to gains scored the previous day as commodities surged on hopes that global demand was picking up.
Australian miners and Japanese trading houses were among the big winners, with shares of Rio Tinto
Some investors also took heart from Australia's central bank lifting interest rates the previous day, the first of any Group of 20 nation to do so in a sign that the emergency measures put in place to stem the financial crisis are gradually being unwound.
The Australian dollar hit a 14-month high above $0.892 as investors bet on more rate rises later this year after the surprise quarter-point hike to 3.25 percent. The rate increase was seen as a sign the global economy was on the mend and fueled gains of more than 1 percent on Wall Street.
The RBA set the cat amongst the pigeons by becoming the first G20 central bank to hike rates. The move likely accelerated the issue of yield re-emerging as a key currency driver the coming months, said analysts at Calyon in a note to clients. The hike is unlikely, however, to be quickly followed by the U.S., Japan or Europe.
Some economists noted that Australia is a special case because its economy and banking system were mostly sheltered from the global crisis and has benefitted from China's aggressive efforts to stockpile resources and kick start growth.
Many major central banks are unlikely to raise rates for some time, trying to ensure there is no dip back into recession.
Federal Reserve officials remain cautious about unwinding emergency measures. Kansas City Fed President Thomas Hoenig said late on Tuesday that the U.S. economy is clearly recovering but that it is too soon for the Fed to withdraw its massive support.
The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was up 1.4 percent, with the material sector the biggest gainer on the day. The Thomson Reuters index of regional shares <.TRXFLDAXPU> edged up 1 percent.
Japan's Nikkei average <.N225> gained 1.2 percent, with financials getting a boost from a rise in U.S. counterparts the previous day after Goldman Sachs upgraded the sector. The banking sector on the Tokyo Stock Exchange first sector rose 3.6 percent.
But South Korea's KOSPI index <.KS11> lagged the region with a rise of just 0.2 percent as investors fretted the country's central bank could follow Australia and lift rates from a record low as soon as a policy meeting on Friday.
Many market players are now expecting the Bank of Korea to lift rates in November from the current 2.0 percent.
Trading volumes were about average across the region, and short-covering in some sectors such as financials played a role in the rise.
DOLLAR ON THE BACKFOOT
The dollar edged up after being hit the previous day by the combination of a surging Australian dollar, gold and commodities.
The dollar index, a gauge of its performance against six major currencies, drifted down 0.1 percent to 76.262 <.DXY> but is still near a 13-month low of 75.827 hit in September.
The dollar edged down 0.3 percent against the yen to 88.55 yen and has slid back near an eight-month low of 88.23 yen hit last month. Those levels are seen as painful to Japanese exporters by slashing the value of their overseas revenue.
Japanese Finance Minister Hirohisa Fujii told the Wall Street Journal that current yen levels were consistent with acceptable market activity and were not extremely abnormal, the latest signal Japan's new government is taking a more hands-off approach on currency policy.
Fujii and other officials have made remarks suggesting they could intervene to stem yen strength, though many market players believe such intervention is unlikely unless the yen's rise becomes more volatile.
Government bonds were mixed as traders reassessed interest rate prospects.
Korean bond futures erased earlier losses and drifted up 3 ticks to 108.78, bouncing back from Tuesday's slide after Australia's rate hike was seen as paving the way for a move in South Korea, where the central bank is worried about a rebounding property market.
(Editing by Kim Coghill)