Asian stocks shrugged off a flat lead from Wall Street, reflecting belief that Asia's economic recovery could hold up relatively well compared to the United States, which faces the possibility of a double-dip recession.
Leading European stocks <.FTEU3> opened 0.4 percent higher, while S&P 500 futures <.SPX> were flat.
China's manufacturing economy regained some momentum in August, while Australia's economy grew at the fastest pace in three years last quarter as households spent far more than expected while exports enjoyed an Asian-driven boom.
The market is still concerned about the global recovery momentum, but based on fundamentals, some funds will flock from developed countries to Asia, said Daniel Chan, chief economist and wealth management strategist BWC Capital Markets in Hong Kong.
The MSCI index of Asia Pacific stocks outside Japan rose 1.5 percent <.MIAPJ0000PUS>, led by commodity-related shares due to optimism about Chinese.
But the MSCI Asia index is still down about 2.5 percent so far this year, compared to a 6.6 drop on the MSCI world-wide index <.MIWD00000PUS>, underscoring Asia's economic resilience.
Analysts expect increased volatility in Asian stock and bond markets as markets brace for a slowdown in the world economy.
Japan's Nikkei average <.N225> rose 1.2 percent after briefly hitting a 16-month low, getting a boost from the Chinese data while technology shares crawled higher in reaction to a sharp fall the day before.
Australian stocks <.AXJO> jumped just over 2 percent, the sharpest daily rise since early July, as investors applauded Australia's outperformance against sluggish global economies.
Australia and New Zealand Banking Group led in a rally in local bank shares, powering 2.4 percent higher.
South Korean stocks <.KS11> gained 1.3 percent, propelled by auto and retail counters including Kia Motors <000270.KS> and Lotte Shopping <023530.KS>, but key technology shares continued to fall amid persisting concern over global economic recovery.
The market is being helped by gains in defensive, domestic consumption issues as investors seek safer bets, said Lee Sun-yeb, a market analyst at Shinhan Investment Securities.
U.S. Treasury yields rebounded slightly after the benchmark 10-year yield recorded its largest monthly drop in August since late 2008, when markets were reeling from the Lehman Brothers collapse.
YEN OFF 15-YEAR HIGH
The yen fell as upbeat Chinese and Australian data improved investors' appetite for risk. It extended losses after Japanese ruling party powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan in a party leadership vote, said he would implement steps including intervention if the yen rose sharply.
The Australian dollar jumped 1 percent to 75.85 yen and the dollar edged up 0.3 percent to 84.40 yen.
Japanese government bonds fell as investors braced for a debt sale, and the yield curve resumed steepening as superlongs sagged on the underlying prospect of potential political change watering down the government's stance on fiscal austerity.
The 10-year yield was up 5 basis points at 1.010 percent while the 20-year yield climbed 7.5 basis points to 1.735 percent, heading back towards a seven-week high of 1.835 percent hit on Monday.
Gold prices hit a fresh one-month high at $1,250.55 an ounce, while crude gained 36 cents to $72.28 a barrel after tumbling 3.7 percent the previous day on signs U.S. stockpiles rose further last week and prospects of bad weather to suppress demand at the end of the driving season.
(Additional reporting by Jungyoun Park in SEOUL)
(Editing by Kazunori Takada)