Asian stocks rose to an all-time high on Friday thanks to upbeat earnings from blue-chip firms such as Sony and Honda Motor, while a rally in oil prices to a record high above $91 a barrel fuelled gains in energy shares.
Profit reports and business outlooks from the likes of Volkswagen were set to take centre stage in Europe, where financial bookmakers were expecting opening gains of up to 30 points for the region's three major stock indexes.
Swept up by the surge in U.S. crude prices, gold rose to $776.75 an ounce -- its best level in 28 years -- while Shanghai copper prices rallied after data on Thursday showed still robust growth in the Chinese economy.
Oil and gold were further boosted by the weak dollar, which languished near its life lows on expectations of further U.S. interest rate cuts after disappointing data including new home sales underscored weakness in the world's biggest economy.
The Federal Reserve meets next week and is widely expected to lower its fed funds rate, following a hefty 50 basis point cut at the last meeting in September.
The market is now hoping for a follow-up one two punch ... and there is a very good chance they could cut again, said Hong Kong-based Mark Konyn, chief executive, Asia Pacific, of Allianz RCM asset management unit.
The liquidity conditions are strong ... a lot of money is coming into markets here following various themes and another boost from lower interest rates in the U.S. will encourage investors further. Risk appetite will be maintained.
Bolstered by gains in commodity stocks, expectations of a U.S. rate cut and strong earnings from major firms such as Japan's Sony , equity markets rose across the region.
Adding to the flow of positive earnings news, sector heavyweight Microsoft Corp lifted its full-year forecasts after posting 23 percent quarterly profit growth.
At 0611 GMT, MSCI's measure of Asia Pacific stocks excluding Japan had climbed 1.7 percent, while Tokyo's Nikkei average settled 1.4 percent higher.
The MSCI index hit a record high of 572.20, surpassing the previous peak of 569.13 set on October 11.
BOOST FROM EARNINGS
Investors snapped up Sony Corp and Honda Motor , sending the two stocks up nearly 9 percent each, a day after both firms posted robust quarterly results.
Upbeat earnings also helped lift Singapore's DBS Group Holdings, South Korea's Hyundai Motor Taiwan's top contract chipmaker TSMC and Singapore-based contract chipmaker Chartered Semiconductor Manufacturing.
But investors were swift to punish companies whose results disappointed. Kia Motor dropped 4.8 percent after the automaker reported a bigger-than-expected quarterly net loss.
Energy shares were in favor on hopes that record high oil prices will boost their earnings. Japan's INPEX Holdings put on 3.3 percent and Woodside Petroleum advanced 2.8 percent.
Gold miners also enjoyed a boost from strong bullion prices with Newcrest Mining climbing 7.4 percent and Zijin Mining gaining 1.3 percent.
Supply worries and growing tensions in the Middle East drove U.S. crude up 1.4 percent to an all-time high of $91.75 a barrel. But levels were still below the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.
In the forex market, the dollar hovered near a life low against a basket of major currencies and the euro on expectations the Fed will lower lending costs at next week's meeting.
The dollar index, a measure of the greenback against a basket of six major currencies, eased 0.1 percent to 77.229, not far off a record trough of 77.093 plumbed on Monday.
The euro climbed to $1.4330, nearing the all-time high of about $1.4350 touched on Monday, while it edged up towards 164 yen, off Thursday's low near 162.40 yen.
High-yielding currencies such as the Australian dollar were in strong demand. The Aussie topped 91 U.S. cents for the first time in 23-Â½ years.
Sharada Selvanathan, a currency strategist at BNP Paribas in Hong Kong, said investors were favoring higher-yielding currencies like the Aussie on hopes that further Fed rate cuts will underpin the U.S. economy and equity markets.
However, if sentiment changes to the view that Fed rate cuts are not going to prevent a U.S. recession, then we will see a significant rise in risk aversion that would ironically be supportive of the dollar and put higher-yielding currencies such as the Aussie and kiwi under pressure, she said.
The rally in stocks weighed on safe-haven government bonds, causing yields to rise. The benchmark 10-year Japanese bonds edged up 3.5 basis points to 1.615 percent.