Asian shares hit their highest level in 11 weeks on Thursday on hopes the U.S. economic downturn may be easing, while the dollar recovered after its latest wobble about its status as the main reserve currency.
The dollar fell against major currencies on Wednesday after U.S. Treasury Secretary Tim Geithner suggested he was open to expanding the use of the International Monetary Fund's special drawing rights, appearing to endorse an idea put forward by China.
Regional bonds were hit by stock market gains, while U.S. Treasuries steadied after falling on Wednesday on concerns that a planned surge in government debt supply to fund stimulus plans would struggle to find sufficient demand.
Stock markets preferred to focus on unexpectedly strong U.S. housing and durable goods data as a sign that the world's biggest economy may be over the worst, which fueled a late rally on Wall Street and provided a cue for Asia.
"The main factor holding the market up is increased optimism regarding an economic recovery later this year," said Shane Oliver, head of investment strategy at AMP Capital Investors on the stock market rally.
"It remains to be seen whether we have seen the bottom or not, but the rally we've been seeing in the last few weeks probably still has a bit further to go," he added.
The MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS gained for a fourth consecutive session and was last up 1.5 percent after earlier hitting its highest since January 8.
Japan's Nikkei average .N225 gained 0.5 percent.
An easing of concerns about the U.S. economy and its banks, plus hopes the U.S. government is getting to grips with toxic assets has fueled a rise of 18 percent in the MSCI ex Asia index so far this month.
But officials urged more global action.
Monetary and fiscal authorities have plenty of ammunition to combat the deepest downturn in decades and the measures already taken will be critical in driving a recovery, the presidents of the Federal Reserve banks of San Francisco and Cleveland said in separate remarks on Wednesday.
Chinese Finance Minister Xie Xuren said countries should increase their economic stimulus packages if need be to boost market confidence, while a senior IMF official warned the world economy will not start its recovery as expected in 2010 if countries withdraw fiscal stimulus too soon.
Stock indexes in Hong Kong .HSI, Shanghai .SSEC and Singapore .FTSTIL gained about 1-2 percent each. Shares in South Korea , Taiwan and Australia .AXJO rose about 1 percent each.
Among the day's leading gainers, Hong Kong-listed ICBC (1398.HK) shares jumped 11 percent after Goldman Sachs (GS.N) pledged to extend the lockup on most of its stake in the state-run bank.
Japan's Elpida Memory Inc (6665.T) surged 18 percent after announcing a plan on Wednesday to raise $471 million eased concerns it would breach debt covenants.
