(Reuters) - Asian shares rose Tuesday, riding on the back of strong gains in global equities overnight after solid manufacturing data from the United States and leading Asian exporters offset signs of mild recession in Europe.
The stronger-than-expected U.S. factory data pushed U.S. stocks to four-year highs while European shares recorded their biggest daily gain in three weeks despite sluggish factory activity in the euro zone.
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> added 0.3 percent to the previous day's modest gain, while Japan's Nikkei average <.N225> opened down 0.3 percent, after rising as much as 1.1 percent the day before to approach a one-year high hit last week.
The U.S. stock rally will definitely lend a hand, said Bae Sung-young, an analyst at Hyundai Securities in Seoul. Worries of a slowdown in China's economy are starting to settle, helping recently laggard, China-related issues to post a strong recovery.
The Institute for Supply Management reported the pace of growth in the U.S. manufacturing sector picked up to 53.4 in March from 52.4 in February, above a 53.0 forecast.
This followed a surprise jump in China's large factory activity and stronger manufacturing in other leading exporters, South Korea and Taiwan, although output was still far from robust.
However, data on Monday also showed the euro zone's manufacturing contracted for the eighth straight month, with the downturn in smaller euro zone nations spreading to core countries Germany and France.
Global industrial production is unlikely to resume an uptrend just yet and while the downtrend persists, this remains in a stabilization phase, Barclays Capital analysts said.
We remain comfortable with our view that U.S. cyclical outperformance will continue to support the USD against low yielding developed market currencies, as well as the CAD against other commodity currencies, they said.
Investors will likely remain cautious about taking aggressive risks, ahead of key data including U.S. nonfarm payrolls on Friday and China's first quarter gross domestic product due next week.
Later in the session, the U.S. Federal Reserve's Federal Open Market Committee will issue minutes from its meeting of March 13.
Tuesday's release of the FOMC minutes may include a discussion of QE (quantitative easing) and shed more light on the possibility of a QE3 to come, said Societe Generale analysts. Market expectations range from viewing the Fed as in a wait-and-see mode to the anticipation of a concrete QE3 announcement in the April FOMC meeting.
Views over the Fed's policy direction are key to determining money flows, as receding expectations for further monetary stimulus have boosted U.S. Treasury yields and lifted the dollar last month against such low-yielding currencies as the yen.
A fall in U.S. Treasury yields pushed the dollar lower against the yen on Monday. The dollar as down 0.5 percent at 81.65 yen. The euro steadied at $1.3330, off Monday's low of $1.3278.
Oil prices rose a second day on Monday, gaining 2 percent on strong U.S. data and supply disruption concerns.
Brent crude futures settled up $2.55 at $125.43 a barrel. U.S. crude eased 0.3 percent to $104.93 a barrel on Tuesday, after settling up $2.21 on Monday.
Shanghai markets are closed through Wednesday while European, U.S. and some Asian markets will be closed on Friday for the long Easter weekend.
Asian credit markets were subdued early on Tuesday, with the spread on the iTraxx Asia ex-Japan investment-grade index wider by 1 basis point.
(Additional reporting by Joonhee Yu in Seoul; Editing by Richard Pullin)