Asian stocks nudged higher on Tuesday on hopes continued stimulus will support economic recovery, while the dollar hovered near a 15-month low on expectations U.S. rates will remain near zero.
European equity futures <.STXEc1> were up 0.3 percent while U.S. equity futures were down 0.3 percent.
Profit-taking weighed on the euro after it gained more than 1 percent on Monday while the dollar <.DXY> steadied against a basket of major currencies after hitting its lowest level since August last year on Monday.
Asian share markets were buoyed by a 2 percent jump in the Dow Jones <.DJI> on Monday to a 13-month high and continued to ride on expectations for a prolonged period of low interest rates after G20 finance ministers pledged at the weekend to keep emergency measures in place until a recovery was assured.
While dollar bulls are licking their wounds, equity and 'everything risky' investors are having a field day, said Matthew Strauss, a senior currency strategist at RBC Capital in Tokyo.
Japan's Nikkei index <.N225> gained 0.6 percent, after giving up some early gains as a late rise in the yen trimmed advances in exporters.
The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> was 0.7 percent higher while the Thomson Reuters index of regional shares <.TRXFLDAXPU> was flat.
High-yield currencies such as the Australian and New Zealand dollars gained against the dollar on carry trade demand as U.S. rates are expected to stay close to zero for some time, traders said.
Rising risk appetite also favored Asian currencies, forcing central banks across the region to intervene to curb currency appreciation as funds flowed into riskier assets.
They included the South Korean won, which neared a 13-month high at 1,155.2 to the dollar.
Japanese government bond futures meanwhile rose after Finance Minister Hirohisa Fujii said he was worried about the rise in long-term rates and that it was important not to lose trust in the bond market.
The yield curve has steepened over the past month on renewed concerns about possible increases in debt issuance later this fiscal year and the size of JGB issuance in fiscal 2010/2011, which starts next April. Fitch on Tuesday said that could trigger a ratings review on JGBs.
CHINA CARMAKERS SURGE
Tech shares got an early boost after Wells Fargo raised its 2010 growth projection for chipmakers and the PHLX semiconductor index <.SOXX> surged 3 percent, but gave up some gains by late afternoon.
Hong Kong's stockmarket hit a two-week high by lunchtime and Chinese automakers got a lift from surging car sales in China, sending Qingling Motors' <1122.HK> shares soaring nearly 12 percent and Brilliance China <1114.HK> shares up 8 percent.
President Barack Obama, in an interview with Reuters, said he plans to raise the issue of China's yuan currency during a trip to China next week.
Currency, along with a host of other issues, will come up, and I'm confident that both the United States and China can arrive at a broad set of policies that encourages trade that benefits both countries, that allows ongoing economic growth, Obama said.
The yuan has consistently been a focus in U.S.-China trade disputes, with U.S. critics saying China keeps its currency undervalued to gain an advantage. China says its stable exchange rates helps its exporters and promotes global economic stability.
Overnight gains in metal and oil prices pushed up mining shares in Australia, where the benchmark share index <.AXJO> advanced 1.3 percent. Mining giants BHP Billiton Ltd
The oil price retreated 0.3 percent to $79.2 a barrel after rallying $2 in overnight trade after a tropical storm shut 30 percent of U.S. offshore production and more than a quarter of its natural gas output.
Gold held above $1,100 an ounce, pausing after hitting a record $1,110.85 on Monday.
(Additional reporting by Kaori Kaneko in TOKYO; Editing by Kazunori Takada)