Japan's Nikkei rose more than 1 percent to a near two-year high on Tuesday, encouraged by rebound in U.S. hi-tech shares as investors bet on solid growth in the economy and corporate profits globally.
MSCI's broadest index of Asia-Pacific shares outside Japan held firm near a two-year high struck last week, but was little changed on the day, with gains in high-tech firms offset by a decline in Australian shares.
A big focus for Asia is whether index provider MSCI will later in the global day open up its Emerging Markets Index to Chinese mainland shares which have restricted access for foreign investors.
Many investors expect the so-called A shares that make up the majority of China's stock market to likely be included after being rejected on three previous occasions.
The blue-chip CSI300 index of mainland stocks was down 0.2 percent.
Wall Street's S&P 500 and the Dow industrial average hit record highs as technology shares bounced back after some sudden falls earlier this month.
"Hi-tech shares just went through a correction. Their valuation is not that expensive, standing far below their levels at the peak of the dot-com bubble in 2000. Given that their profits are expected to see exponential growth in coming years, it is premature to say the rally in hi-tech shares is over," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.
U.S. financial shares also gained as U.S. debt yields rose after New York Federal Reserve President William Dudley, a close ally of Fed Chair Janet Yellen, said U.S. inflation should rebound alongside wages as the labour market continues to improve.
The 10-year U.S. Treasuries yield edged up to 2.184 percent from a seven-month low of 2.103 percent touched on Wednesday, following surprisingly weak U.S. inflation data.
"Even though the Federal Reserve is about to shrink its balance sheet, possibly as soon as in September, U.S. bond yields are kept at low levels, which are very comfortable for stocks," said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.
"Trade volume is light and whether the market continues to rise depends on whether large cap tech shares continue to rebound," he also said.
The rebound in U.S. bond yields helped to lift the U.S. dollar, which rose to 111.775 yen, its highest level in more than three weeks.
The euro traded at $1.1148, just above its two-week low of $1.11315 set on Thursday.
The British pound slipped slightly to $1.2732 from Monday's high of $1.2814, held back by uncertainty over domestic politics and over Britain's economic future, as formal Brexit negotiations got under way on Monday.
Oil prices flirted with this year's lows as market players saw more signs that rising crude production in the United States, Libya and Nigeria undercut OPEC-led efforts to support the market with output curbs.
Brent crude futures traded at $47.02 per barrel, up 0.2 percent on the day but not far from last week's low of $46.70 and five-month low of $46.64 touched in early May.
U.S. crude futures stood at $44.26 per barrel, about a half cent above its five-month low of $43.76 set on May 5.
Safe-haven gold hit a one-month low of $1,243.2 an ounce as risk sentiment improved, before bouncing back a tad to $1,245.5.