Global stocks hit a record high on Tuesday, lifted by financial companies after subprime losses detailed by big banks, including Citigroup Inc, raised hopes that the worst of the credit squeeze may be over.
The beaten-down dollar found brief respite from its lifetime lows reached on Monday, which tugged gold back from 28-year highs also reached on Monday.
The dollar's value against a basket of six major currencies rose slightly to 77.950 from a lifetime low of 77.657 a day earlier. The dollar traded at $1.4223 per euro, stronger than a record low on Monday of $1.4283.
Citigroup helped drive the Dow Jones industrial average to a record high on Monday after its chief executive said that third-quarter profit would drop 60 percent but the financial services company would return to a normal earnings environment in the fourth quarter.
The Wall Street rally, which also pushed the Nasdaq to its highest level in more than six and a half years, provided incentive for stocks elsewhere to push into record territory.
By 0258 GMT (10:55 p.m. EDT on Monday), MSCI's All-Country World Index was up 0.3 percent at a record high of 417.22. MSCI's Asia-Pacific ex-Japan and emerging market indexes also hit record peaks.
Asia's biggest market, Tokyo, rose 1 percent, helped by the dollar's firmer tone against the yen.
Investors are positively reacting to rallies in Wall Street. Also, with the dollar at the higher end of 115 yen, they feel safe to buy exporters like automakers, said Toshiyuki Kanayama at investment information centre of Monex Inc in Japan.
Citigroup's announcement followed similar hefty losses for European investment bank UBS AG and Credit Suisse in the wake of the credit crisis.
The banking giants are the latest in a string of global finance houses that have reported damage from a downturn in the U.S. housing market, which has triggered a global credit crunch.
But relief that the impact may ease in the near term boosted financials.
Australia's benchmark S&P/ASX 200 index hit a record high at 6,656.5 points and was up 1.3 percent at 6,650.3, lifted by financials such as Babcock & Brown and Allco Finance Group.
Buoyant commodity prices drove shares in miners like BHP Billiton and Rio Tinto higher.
Hong Kong's benchmark Hang Seng Index hit an all-time high at 27,989.14.
Singapore's Straits Times Index also struck a record for the fourth straight trading session, due to gains in banks such as DBS Group Holdings.
Japan's Nikkei stock average cleared 17,000 points for the first time in nearly eight weeks, after financial shares such as Mitsubishi UFJ Financial Group Inc gained.
JGBS, OIL SLIP
Japanese government bonds slipped, handing back gains from the previous day as the jump in Tokyo shares prompted selling of safe-haven debt.
December 10-year futures fell 0.21 point to 134.88, slipping towards a six-week low of 134.32 struck last week.
The yield on the benchmark 10-year JGB edged up 1.5 basis point to 1.675 percent.
The benchmark 10-year U.S. Treasury note yielded 4.559 percent.
Oil prices headed back toward $80 a barrel, retreating from the near-record highs of last week and still nervous over the threat of a deeper economic slowdown in the United States.
U.S. crude was down 4 cents at $80.20 a barrel in Asian trade.
The price outlook is pretty bearish at this point. I expect prices to fall below $80 this week, said Dariusz Kowalczyk, chief investment strategist at CFC Seymour.
In the long-run, I expect prices to fall below $70 on the modest global economic outlook and the decline in the hurricane premium, he added.
Gold edged down from a 28-year high to trade around $744 as the dollar edged up from its record lows, making the precious metal slightly more expensive in currencies other than the dollar.