Asian stock markets rose on Tuesday as the weak U.S. dollar spurred overnight gains in commodities, boosting commodity-linked stocks in the region.

European stock markets <.FTEU3> were expected to open slightly firmer on Asian and U.S. gains, with energy shares supported by rising oil prices.

Crude oil futures held above $82 a barrel on Tuesday after reaching the highest level in almost two weeks the previous day on optimism about the global economic recovery and ahead of key U.S. inventory data.

Markets were also underpinned by news that U.S. consumer spending rose for a fifth straight month in February, implying that its consumption may be strong enough to keep its recovery going.

Japan's Nikkei average <.N225> climbed to an 18-month high, and looked set to extend gains in the new business year and quarter starting this week despite worries that it was overbought.

The euro was trading more or less flat against the dollar at $1.3483 after rebounding from a 10-month low below $1.33 last week, mainly on short covering ahead of the quarter's end.

The euro was also supported by Greece's successful sale of 5 billions euros ($6.7 billion) of bonds, the first test of investor appetite since European powers last week agreed to a financial safety net for Athens as its battles a debt crisis.

The dollar was also weaker against commodity currencies like the Australian and New Zealand dollars, with the dollar index <.DXY> against major currencies slipping 0.16 percent.

Analysts, however, said the dollar's weakness was likely to be short-lived.

The key this year is that fiscal stimuluses have to be cut back, said Kevin Scully, executive director at NRA Capital in Singapore. They have to fund this somehow, they have to raise rates. So the dollar will strengthen, the euro will flatten out.

The euro's strength took three-month copper on the London Metals Exchange to its highest level overnight since August 2008. Prices retreated slightly in Asian trade, but underlying strength was seen likely to stay on improving demand.

Led by resources-linked shares, the benchmark Nikkei closed up 1 percent at 11,097 points, its highest since October 2008.

The next quarter is likely to see the Nikkei boxed into a 10,000-11,500 range, said Yutaka Miura, chief technical analyst at Mizuho Securities.

It's risen quite a lot recently on hopes for global economic recovery and good Japanese results, but if these don't live up to expectations there could be some short-term profit-taking.

With one trading day left in March, the Nikkei has gained about 5 percent for the quarter as investors were drawn to its relatively inexpensive valuations, bringing its gains for the financial year ending on Wednesday to more than 36 percent.

Across Asia, the materials sub-sector of the MSCI Asia ex-Japan index <.MIAPJMT00PUS> was up over 1.2 percent, compared to a 0.57 percent rise in the overall index


BHP Billiton and Vale , the No. 3 and No. 1 iron ore producers in the world respectively, persuaded steel mills to buy iron ore based on a quarterly pricing system as of April 1, signaling the near-demise of annual fixed-price contracts that have cost miners billions of dollars.

The news augurs well for mining stocks, including World No. 2 producer Rio Tinto , which has also said it hopes to replace annual prices with shorter ones this year.

Analysts were also excited by reports that major Japanese and South Korean steel mills had agreed to a price increase of 90 percent for iron ore this year, which pushed the Aussie dollar up almost a cent, its biggest one-day rally in six months.

The Aussie was also well-supported by growing talk of another central bank interest rate hike next week as higher prices of exports like iron ore promise a big boost to the economy.

Market performance in Asia in the first quarter has been mixed, with the Asia ex-Japan stock rally largely stalling after surging 68 percent in 2009, held back by worries that the global economic recovery and a rebound in corporate profits may sputter.

The MSCI Asia ex-Japan equities index has gained a scant 2 percent so far this year, prompting investors to shift into regional bonds, especially high-yield and riskier credits.

The benchmark JPMorgan EMBI+ credit index for Asia rose 2.8 percent in the first quarter, but far larger gains have been seen in some Southeast Asian sovereign debt, which have also benefited from appreciating local currencies.

The JPMorgan GBI-EM broad index on Indonesia is up 11 percent so far this year in dollar terms, according to Thomson Reuters data.

(Editing by Kim Coghill)