Asian stocks rebounded on Wednesday, following a jump in US shares, after the Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being.
But investors remained wary about the implication of the central bank's move - that it expects the US economy to remain weak far longer than previously forecast - and this supported demand for safe havens such as gold and the Swiss franc.
"Volatility is calming down from an extreme level. Clearly there's going to be considerable concerns still, but the market had gotten seriously carried away and gone to an extreme of fear," said Greg Gibbs, strategist at RBS in Sydney.
World stock markets had been tumbling since the start of August on fears of a slide back into recession for the United States, reinforced by a downgrade of the US credit rating on Friday, and the ever-expanding euro zone debt crisis.
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MSCI's all-country world stock index remained about 16 percent below its May peak on Wednesday, after slipping as far as 20 percent, the generally accepted definition of a bear market, on Tuesday.
Commodities whose demand is related to economic growth, such as oil and industrial metals, and commodity-linked currencies such as the Australian dollar rose.
Tokyo's Nikkei rose 1.2 percent and MSCI's broadest index of Asia Pacific shares outside Japan gained about 3.2 percent, led by the materials sector, which jumped more than 3.5 percent.
The benchmark has fallen around 12 percent in August.
Australia's resource-heavy index gained 3.1 percent.
Wall Street shares posted their biggest one-day gain in more than two years on Tuesday, when the S&P 500 index leapt 4.7 percent.
"It's possible the bottom has been met but it is too early to say so," said Albert Hung, chief investment officer at Sydney-based Alleron Investment Management.
"Normally when you see this sort of movement you need another two weeks to be sure the bottom has been found."
While the US downgrade from Standard & Poor's was a big symbolic blow, investor confidence has also been shaken by data suggesting the world's biggest economy was stalling and even second-ranked China was facing headwinds.
The Fed said US growth was proving considerably weaker than expected, suggesting inflation will remain contained for the foreseeable future.
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The central bank's decision on rates is likely to be good news for the so-called carry trade, in which traders use cheap dollar loans to fund buying riskier, higher-yielding assets.
"Once volatility eases, they should be in business until at least mid-2013," wrote Rabobank analyst Philip Marey in a report.
Against the Swiss franc, the dollar bought around 0.7240 francs , having plunged 6 percent at one stage on Tuesday to a record low around 0.7067.
The dollar dipped to around 76.90 yen , not far from the all-time trough of 76.15 reached in mid-March.
The euro also touched a record low against the Swiss franc at around 1.0075 , before recovering some ground to 1.0390 francs. But the single currency jumped on the dollar to $1.4350 , putting more distance from last week's trough around $1.4054.
Continued strength in the Swiss franc and yen keeps alive the prospect of further intervention by the Swiss and Japanese authorities, after both took steps to weaken their currencies last week.
Gold firmed from late New York levels to around $1,755 an ounce, after striking the latest in a string of records around $1,778 on Tuesday.
US crude oil climbed back above $80 a barrel, rising about 2.5 percent to trade around $81.30 , while London metal exchange three-month copper rose around 2 percent, climbing back towards $9,000 a tonne.
(Additional reporting by Ian Chua in Sydney and Miranda Maxwell in Melbourne; Editing by Richard Borsuk)