Asian stocks rose in early trade on Tuesday, tracking U.S. shares which gained on optimistic remarks from influential investor Warren Buffett, while Chinese manufacturing growth slowed to a six-month low.
Japan's benchmark Nikkei average <.N225> climbed 0.7 percent and the broader Topix index <.TOPX> rose 0.9 percent, while Australian shares <.AXJ0> also gained.
Buffett, chairman of Berkshire Hathaway Inc
Chinese manufacturing growth slowed in February, according to an official survey, as the government's sustained campaign to tame inflation weighed on industrial activity.
High global commodity prices complicated the task of monetary tightening, pushing a gauge of industrial input prices to a three-month high in China's official purchasing managers' index.
The overall PMI, which is designed to provide a snapshot of conditions in the manufacturing sector, fell to 52.2 in February from 52.9 in January, the China Federation of Logistics and Purchasing said.
Inflation pressures are rising but economic activity is slowing. Slower economic growth is good for cooling inflation, said Wang Hu, economist at Guotai Junan Securities in Shanghai.
China's battle with inflation is a key market factor, and some foreign investors may favor Japanese stocks, analysts said.
U.S. and European investors have been the main players in the Japanese market. But Asian investors have joined in as Japan is one of the few countries with a low risk of rate hikes, said Shun Maruyama, chief strategist at Credit Suisse.
They are buying Japanese stocks on a process of elimination as Japan has more tolerance for higher oil prices than other Asian countries.
Crude oil traded close to $120 per barrel last week, its highest in more than two years, largely on fears that political upheaval in Libya would spread across oil-producing nations in the Middle East, but Saudi Arabia calmed the market with extra supply.
Brent crude was steady around $112 per barrel, while U.S. crude for delivery in April rose slightly to $97.07 per barrel. Gold, which in February recorded its biggest monthly gain since August as worried investors sought safety, was up around $1 to 1411.70 per ounce.
The dollar index <.DXY>, which tracks its performance against a basket of major currencies, hit a 3- low of 76.756, before recovering slightly to 76.883.
The British pound hit its highest in four months versus the dollar, on expectations the Bank of England will raise rates, and that high oil prices will retard U.S. economic growth.
Investors are awaiting some key U.S. economic events. This week will see Fed Chairman Ben Bernanke's testimony at the Senate Banking Committee on Tuesday and U.S. jobs data on Friday.
(Editing by Ron Popeski)