Most Asian stocks rose on Thursday with energy stocks higher as oil held near a record peak above $80, while expectations of an U.S. rate cut next week pinned the dollar near an all-time low versus the euro.
European stocks were seen falling in early trade on with financial bookmakers anticipating Britain's FTSE 100, Germany's DAX and France's CAC 40 all to open lower.
Tokyo's Nikkei average ended the session 0.2 percent higher, erasing a part of Wednesday's losses sparked by the shock resignation of Prime Minister Shinzo Abe.
Strength in stocks and an overnight fall in U.S. Treasuries weighed on Japanese government bonds, with the benchmark 10-year yield rising from a 19-month trough of 1.5 percent hit earlier this week.
MSCI's measure of Asia Pacific stocks excluding Japan inched up 0.3 percent by 0610 GMT, after striking a six-week high of 483.52.
The MSCI index has risen around 20 percent from the five-month trough plumbed on August 17 and was just 5 percent below the July 24 life high.
Analysts said Japanese stocks were supported as the reaction of overseas markets to Abe's resignation had been limited but lingering political uncertainty his successor is selected may keep Japanese equities underperforming.
We do not believe PM Abe's sudden departure will impact negatively on the Japanese economy, said Masuhisa Kobayashi, chief JGB strategist at Barclays Capital, in a research note.
But it is possible that foreign investors will shy away from investing in Japanese stocks as a result.
CRUDE NEAR RECORD
Energy stocks rose, with the MSCI index of energy shares in the region excluding Japan 0.4 percent higher.
Australia's Caltex and Santos both climbed around 2 percent, while Japan's INPEX Holdings put on 3.5 percent on expectations that higher crude prices will boost the value of their assets feed through to profits.
U.S. crude hit $80.18 a barrel on Wednesday as investors fretted about tight U.S. inventories and potential supply disruptions from a storm in the Gulf of Mexico. At 0612 BMT, oil was at $79.72.
South Korean stocks gained as LG Electronics Inc surged on hopes for strong earnings, with the key KOSPI jumping nearly 2 percent.
Hong Kong's Hang Seng Index rose 0.4 percent.
China's top alumina and aluminum producer, Chalco, tumbled nearly 10 percent on news Alcoa Inc (AA.N: Quote, Profile, Research) sold its stake in the Chinese firm for about $2 billion.
The dollar traded near a record low versus the euro plumbed overnight and was just off a 15-year low against a basket of currencies.
Expectations of an interest rate cut of as much as 50 basis points by the Federal Reserve at the September 18 meeting weighed on the dollar.
The real problem is the U.S. economy, said Luke Waddington, head of forex trading at Royal Bank of Scotland in Tokyo.
Overall there's some excitement in the price in terms of dollar weakness.
The euro bought $1.3895, near the record high just above $1.39, and fetched 158.85 yen.
JPMorgan Chase currency strategists said the euro may struggle to extend gains if the Fed cuts rates by just 25 basis points and if oil prices fall back from record peaks, but very short-term momentum could easily rule the day.
Tokyo traders also said that currencies that have performed well against the dollar may be vulnerable to profit taking ahead of an upcoming three-day weekend in Tokyo, as well as the Fed meeting and refinancing of a huge wave of maturing commercial paper borrowings this month.
The dollar's trade-weighted index against six major currencies stood at 79.411, near a fresh 15-year low of 79.319 reached on Wednesday. Against the yen, the dollar was at a touch firmer at 114.30 yen.
Spot gold slipped to $709.40 per ounce, but hovered within easy reach of its 16-month high of $714.20 set on Tuesday