Asian shares climbed to a six-month high on Monday, as hopes that the global economic downturn is nearing its bottom spur demand for riskier assets while hitting the yen and safe-haven government bonds.
Economic recovery hopes lifted oil prices by almost $1 per barrel, while Japanese bonds fell, sending the benchmark 10-year yields to a 4- month high and the yen slid toward six-month lows against the dollar and the euro.
Riskier and higher-yielding currencies such as the Australian and New Zealand dollars rose, reflecting improved risk appetite.
North Korea's launch of a rocket on Sunday had little market impact, given that the action had been expected and is seen having limited economic implications.
Instead, investors saw a silver lining in recent bleak data. Key U.S. jobs report on Friday showed unemployment soared to 8.5 percent last month, or a 25-year high, but markets found comfort in the fact that the numbers came in just as expected.
In Europe, the euro zone's dominant service sector contracted sharply again in March, but not as rapidly as in February, a private survey showed on Friday.
The fact that investors had shrugged off the gloomy jobs data on Friday is indicative that the focus has now shifted to a global recovery, said David Moore, a commodities strategist at the Commonwealth Bank of Australia.
The MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> rose 2.6 percent as of 11:35 p.m. EDT, after earlier touching its highest since October 16.
That marked a fifth consecutive session of gains and a rise of more than 30 percent since the gauge hit their 2009 low on March 4.
Japan's Nikkei average <.N225> gained 1.9 percent, while other major indexes, including in Hong Kong <.HSI> and South Korea <.KS11>, rose by 2-3 percent.
Global stock markets have rallied last month on expectations that a worldwide combination of steep interest rate cuts, stimulus measures, and outright bailouts of some industries will eventually pull the global economy out of its worst slump since the 1930s.
U.S. Federal Reserve Chairman Ben Bernanke on Friday said the U.S. central bank will continue to use the unorthodox methods it has resorted during the financial crisis to settle markets and set the stage for a resumption of growth.
There is still a measure of caution in markets ahead of January-March U.S. corporate earnings reporting season, that unofficially kicks off with aluminum producer Alcoa Inc
But the tentative return of confidence weighed on the yen, a currency that tends to strengthen with bouts of market uncertainty.
The dollar rose as high as 100.93 yen on trading platform EBS, before retreating to 100.91 yen, up 0.6 percent from late New York trade on Friday. The euro climbed 1.3 percent to 137.05 yen on EBS.
However, the dollar lost some ground against other currencies, with a gauge of its performance against six major currencies <.DXY> down 0.5 percent, as investors were switching to higher-yielding currencies.
The New Zealand dollar jumped more than 2 percent to a five-month high against the yen, and the Australian dollar gained 1.3 percent to a six-month peak.
The South Korean won rose more than 2 percent against the dollar to as high as 1,309.8 per dollar from Friday's domestic close, shrugging off jitters about North Korea's rocket launch.
The launch was expected, and there was little out of the ordinary about it in the eyes of investors. It's now perceived as a political matter with few economic implications, said Lee Sun-yeob, a market analyst at Goodmorning Shinhan Securities.
Oil prices also rose with U.S. light crude for May delivery up 92 cents at $53.45 and analysts said markets might take aim at $55 if stocks rally continued.
Safe-haven gold fell to $876.25 from its New York notional close of $892.50 on Friday. Government bonds also weakened.
The U.S. benchmark 10-year note fell 2/32 to yield 2.902 percent, while Japanese June 10-year futures fell 0.32 point to 137.09 after hitting their lowest since November 10. The benchmark 10-year yield touched 1.440 percent, its highest since November 20.