Investor kept calm on Wednesday as geopolitical risks diminished after U.S. President Barack Obama eased fears of any immediate military action on Syria.
Markets consolidated the gains seen over the past two days which came after a Russian offer to push Syrian President Bashar Assad to put chemical weapons under international control.
In an internationally televised address on Tuesday in the U.S. Obama said Congress would delay a vote on whether or not to pursue a military strike on Syria. He added that he would work with Russia, China and American allies to force Syria to hand over its chemical weapons.
His dovish rhetoric helped boost risk sentiment in Asia, powering Japanese stocks to a seven-week high before paring gains, while Australian stocks surged to their highest level in three-and-a-half months.
In Europe, sentiment was largely positive with the pan-European FTSEurofirst 300 index tipping into the green.
Tony Nash, managing director of IHS Consulting in Asia, said in a tweet that risk appetite seemed to have returned.
"Syria strike seems to be off, China data looking good, and the taper is likely benign (if it happens in September). Markets back in a risk on mood?" he said.
Meanwhile, Chris Weston, strategist at IG markets, said in a research note that the headwinds investors have been fretting over appear to be calming down.
"Global equity markets continue to climb the wall of worry and creep ever higher as seemingly event risk after event risk gets priced out," he added.
Safe-haven assets, which have risen on in recent weeks on fears that the Syria situation could escalate into a full scale war, sold off.
(Read more: Syria, debt offerings could dominate Wednesday trade)
Gold prices backed away from a three-and-a-half month high of $1,433 per ounce seen two weeks ago to trade around $1,365 per ounce by lunchtime in Asia on Wednesday. Other safe haven assets like the Japanese yen also weakened; the U.S. dollar touched a seven-week high of 100.60 yen on Wednesday.
Oil markets also softened as Syria-related supply concerns eased. European Brent hovered around the $110 per barrel level on Wednesday morning, while U.S. crude also moved under $106 a barrel before regaining ground.
Meanwhile, the commodity-linked Australian dollar eased off its intraday high to trade at US$0.9290.
Hans Goetti, chief investment officer at Finaport, said he thought the "Syria premium" in oil prices was unlikely to return.
(Read more: Sell crude on Obama's Syria shift: Pro)
"I think the strikes are probably off the table. There is no majority in Congress that would approve and without that [the U.S.] is not going to do anything. Then of course the Syria premium in the oil price will probably not come back but of course you cannot totally rule it out," he said.
John Studzinski, senior MD and global head of Blackstone Advisory partners, told CNBC, that Obama's speech opened the door for the U.S. to revert to "traditional diplomacy" which helped ease anxiety in global markets.
"We've seen with Afghanistan, Libya, Iraq, Egypt and Tunisia, America doesn't master the end game very well... So there is a lot of skepticism," he said. "Right now whether it's right or wrong there is a chance to revert to some good traditional diplomacy and people have forgotten that America is capable of diplomacy."
This week Russia unveiled a diplomatic alternative for Syria, which involved handing over its chemical weapons, a move that Obama pledged to explore in his speech on Tuesday.
—By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie