Asian stocks rebounded on Tuesday, a day after suffering their biggest percentage fall in 10 weeks, as Citigroup's best results since 2007 raised investor optimism about earnings growth.
A flurry of good results from Wall Street and easing fears about the potential fallout from fraud charges against Goldman Sachs also pulled down the dollar and the yen.
The optimism spilled over into Europe with stocks in the region opening higher.
The Australian dollar surged after minutes from a central bank meeting hinted that more interest rate rises were in the pipeline, while tame inflation data pressured the New Zealand dollar as it made a case for a delay in monetary tightening.
The MSCI index of Asia-Pacific stocks outside Japan rose 0.9 percent, reversing some of Monday's 2.3 percent fall that followed news of the charges filed by the U.S. Securities and Exchange Commission (SEC) against Wall Street titan Goldman Sachs.
Regional energy, financial and industrial stocks were among the big gainers.
We think earnings have been good, valuations are in the middle of the historical range of the last 15 years, said Khiem Do, head of the Asia multi-asset group at Baring Asset Management which oversees $50 billion.
Thomson Reuters data showed that 83 percent of Standard & Poor's 50 <.SPX> firms so far have beaten expectations for the first quarter. That compares to 61 percent for a typical quarter.
The Goldman concerns had an impact on U.S. financials but I don't know what that has to do with Asian financials, Khiem Do said while adding the previous day's fall was sentiment-driven.
The Goldman news initially sparked fears of wider crackdowns at a time when regulators across the world are tightening their grip on the way banks' conduct their business, those fears have since receded.
A report the SEC had split 3-2 along party lines to approve an enforcement case against Goldman Sachs showed it was not a clear-cut decision and triggered a rally on Wall Street that was also inspired by upbeat earnings from Citigroup .
We have the G20 later this week and it feels like regulators and politicians are going to be looking to tighten up control on banks, so it's hard to see much recovery in stocks and it could be a bit of a choppy trading week. said Gerrard Katz, regional head of FX trading at Standard Chartered in Hong Kong.
The civil lawsuit filed by the SEC may not open the floodgates for similar enforcement actions of its kind as some believe might happen.
And ironically, the market is now shifting its attention to Goldman's blowout earnings that are expected to give the rally a fresh leg-up.
Among other companies reporting this week are Coca-Cola , Apple , United Technologies and Johnson & Johnson .
Greece will also be in focus as the debt-stricken nation aims to raise 1.5 billion euros ($2.0 billion) via auction of 3-month T-bills on April 20 amid stubbornly high borrowing costs that may force it ask for aid from its euro zone peers and the IMF.
The Australian dollar jumped and the New Zealand dollar eased as investors took opposite views on the monetary policy direction for the currencies' respective economies.
The Aussie rose 0.3 percent to $0.9283, while the kiwi fell 0.5 percent to $0.7102 after the inflation data.
Reserve Bank of Australia minutes showed members felt it was not prudent to delay a hike given an expected boom in the country's terms of trade.
In New Zealand, inflation data backed views the central bank would be in no hurry to hike rates before the middle of the year.
On the other hand, inflation was a cause for concern for two of the biggest economies in the region, and central bank actions to contain rising prices were likely to hurt performance of stocks, HSBC said in a report.
The combination of slowing momentum, rising rates and structural worries on China and India will not be helpful for equities, it said in a report.
We expect Asian equities to rise over coming quarters as long as growth comes through but to continue to lag global equities, it said, while adding that markets such as Australia, Malaysia and India, where the central banks have raised rates, had underperformed the region.
India's stock markets extended gains after the central bank raised the benchmark interest rates by 25 basis points, which was less aggressive than the 50 bps increase some had expected.
Asia's third-largest economy is set to grow at 8.5 percent in the current financial year and 9 percent the following year, in sharp contrast with the Western world's anemic growth outlook.
(Additional reporting by Charlotte Cooper in TOKYO)
(Editing by Kazunori Takada)