Asian stocks rose to an 11-week high on Thursday as China's manufacturing industry picked up and foreign buying boosted the technology-heavy markets of Taiwan and South Korea.
The Nikkei average rose to a new 18-month closing high half with the yen's recent downtrend boosting exporters. Traders predicted more gains for the benchmark in the new quarter in spite of signs of strains on technical charts.
China's manufacturing data is expected to boost European shares. STOXX Europe 50 futures, Germany's DAX futures and France's CAC-40 futures were up 0.6 to 0.9 percent.
The dollar was steady against the yen compared to late U.S. trading on Wednesday at 93.47 yen, having touched a three-month high of 93.65 yen earlier in the day.
MSCI's Asia-Pacific ex-Japan index <.MIAPJ0000PUS> was up 1.1 percent, after hitting its highest since mid-January. This marks a solid start to the second quarter after the benchmark gained 1.5 percent in Jan-Mar The Thomson Reuters index for regional shares <.TRXFLDAXPU> was up 1.4 percent.
Analysts say Asia was merely in catch-up mode. Technology and consumer durables stocks were the big gainers as foreigners bought stocks that have underperformed this year.
Our markets have underperformed and I think it is premature to worry about too much money coming into the region, said Geoff Lewis, head of investment services at JP Morgan Asset Management.
Compared with Asian shares, world stocks measured in the MSCI All-Country World Index <.MIWD00000PUS> were up 2.7 percent in the first quarter, while emerging market shares <.MSCIEF> were up 2 percent.
The mood among investors was boosted by two business surveys which showed China's manufacturing moved up a gear in March as orders climbed, pointing to brisk first-quarter GDP growth.
HSBC's China Purchasing Managers' Index, or PMI, showed first-quarter manufacturing output expanded at the briskest clip in the survey's six-year history.
The official purchasing managers' index rose to 55.1 in March from 52.0 in February, beating the market consensus of 54.5.
The technology-dominated markets of Taiwan and South Korea were among the leading performers with foreign buying boosting the stock markets in Seoul and Taipei because of earnings expectations.
Foreign investors coming in now seem to be long-term funds. Normally they had been more defensive players, but their more active buying is actually lifting the broader market, said Choi Kwang-hyeok, a market analyst at Hanwha Securities.
Funds tracker EPFR Global said investor appetite for exposure to emerging markets took global emerging markets equity fund flows to a 10-week high and flows into emerging bond funds to their second best week ever in the period to March 24.
The stock market benchmarks in Taiwan and South Korea closed at a 10-week high.
Although the data released in China triggered expectations of 11 percent plus growth in the first quarter which could lead to tightening by authorities, those fears were kept in check by comments from the central bank reaffirming its monetary stance.
In a statement released a day after the quarterly meeting of its monetary policy committee, the People's Bank of China vowed to maintain appropriate credit growth which took stocks in Shanghai and Hong Kong to their highest in over two months.
The Shanghai Composite index <.SSEC> was up 1.1 percent while in Hong Kong the China Enterprises Index <.HSCE> of top locally listed mainland Chinese stocks was up 1.8 percent at 12,618.
Goldman Sachs has forecast more gains for the China Enterprise benchmark with a target of 15,000 or 20 percent above the current level.
We sense that Chinese equities have fallen off investors' radars somewhat, positioning is light, and sentiment is, at best, skeptical, making us all the more keen to get involved, a report said while highlighting robust economic growth and undemanding price-earnings multiples.
Materials also received a boost from M&A activity in Australia's sizzling commodities sector.
Australia's Lihir Gold
In southeast Asia, strong foreign buying lifted stock markets in the two biggest economies.
Thailand's benchmark stock market index <.SETI> hit a 21-month high while Indonesia's benchmark index <.JKSE> was up 1.8 percent within sight of the record high hit on January 14, 2008.
Investors are awaiting non-farm payrolls data due in the United States on Good Friday, a holiday for most markets.
Analysts polled by Reuters forecast a 190,000 job gain in March payrolls, which would be the second monthly increase since the recession began in December 2007.
(Additional reporting by Jungyoun Park in SEOUL; Editing by Jan Dahinten)