Asian stocks on Tuesday got a lift from the stronger close on Wall Street, with Seoul, Tokyo and Australian markets all closing higher.
But China's key stock index the Shanghai Composite bucked the regional trend and sank 2.32 percent to its lowest close in seven weeks. Property shares were battered by lingering worries over Beijing's campaign to forestall brewing asset bubbles by steps including adding new share supplies.
Japan's Nikkei average climbed 1.9 percent to a three-month closing high, supported by techs stocks and as a weaker yen lifted exporters.
Tokyo Electron, the world's No.2 semiconductor equipment maker, climbed 3.8 percent to 5,730 yen. Chip-tester maker Advantest jumped 4.5 percent to 2,335 yen. Sony rose 2.7 percent to 2,650 yen.
Chip-related stocks advanced after the Nikkei business daily said that Toshiba and partner Sandisk would jointly invest 150 billion yen ($1.7 billion) to boost their venture's production capacity by about 40 percent.
Toshiba climbed 4.7 percent to 518 yen, while DRAM chipmaker Elpida rose 4.6 percent to 1,387 yen.
Shares of high-tech exporters also gained after the tech-heavy Nasdaq hit a 15-month high following a brokerage upgrade on Intel, citing solid "end-market" conditions.
Isuzu Motors jumped 6.8 percent on a report that the truck maker wants to develop new diesel engines for General Motors.
Toyota Motor rose 2.2 percent to 3,800 yen after media said the world's biggest automaker plans to cut car parts procurement costs by around 30 percent over three years to help
it regain profitability.
The benchmark index rose 194.56 points to 10,378.03, its highest finish since Sept. 24. The broader Topix gained 1.3 percent to 903.06.
Analysts said the Nikkei's rise to hold well above 10,200 -- a level it has failed to maintain in recent sessions -- boded well for trade for at least the rest of this year.
Seoul shares finished 0.6 percent higher in quiet trade, boosted by builders on expectations a Korean consortium was close to winning a $40 billion deal from the Middle East.
United Arab Emirates is reportedly ready to award the multi-billion-dollar contract to South Korean companies in a consortium to build several nuclear reactors.
The market talk lifted Doosan Heavy Industries. Its shares soared 12 percent to 70,000 won, their highest close in almost two months.
Korea Power Engineering Co Inc (KOPEC), a nuclear power plant designer, extended its bullish run, surging by the daily limit to a record of 41,550 won just over a week after its market debut.
KOPEC's parent company, Korea Electric Power Corp, also took part in the Korean consortium for the pending UAE order, along with Hyundai Engineering and Construction and Samsung C&T Corp.
The South Korean companies involved declined to comment.
The Korea Composite Stock Price Index added 0.69 percent to 1,655.54 points, rebounding 8.6 percent from Nov. 27 when it tumbled to an almost four-month low.
Expectations that the government plans to boost the nuclear power sector and bring forward a initiative to develop nuclear reactors also added power to the rally.
LG Electronics rose 3 percent to close at its strongest level in more than two months.
An technology analyst said shares of mobile phone and TV makers factored in expectations that earnings in coming quarters would be better than expected.
POSCO gained 1.7 percent after the company said it had failed to strike a deal with visiting top managers of Thainox over a possible acquisition of Southeast Asia's largest stainless steel producer, but said it was open to further negotiations.
Australian stocks ended 1.5 percent higher as investors looked ahead to the prospect of more merger activity supporting the market in the new year.
In the latest rush of pre-Christmas deals, Nufarm put its shares on a trading halt after China's Sinochem cut its offer for the firm. Macarthur Coal and Gloucester Coal also went on halts amid bid reports.
The benchmark S&P/ASX 200 gained 69.1 points to 4,704.2. The index has gained 26 percent up to today for the calendar year, putting it on track for the best year since 1993.
New Zealand's benchmark NZX 50 index rose 0.9 percent to 3,179.2.
Banks rallied, with one dealer saying a big buy order for all of the four major banks came through late in the session. That helped lift Westpac up 3.4 percent at A$24.15.
But retailers underperformed the broader market, with news reports of early discounting to attract shoppers weighing on some stores. David Jones edged up 0.4 percent at A$5.35,
and Harvey Norman fell 0.5 percent at A$4.18.
Index heavyweight BHP Billiton gained 1.7 percent to A$41.65. The company said shortly before market closing that it had pulled out of a $2 billion nickel project in the southern Philippines.
Taiwan stocks rose 0.88 percent to their highest close in 1-½ years, with UMC and other chip shares leading the way on growing optimism over technology demand in 2010.
The main TAIEX rose 68.73 points to 7,856.00, the highest close since June 23 of 2008.
TSMC shares advanced after it raised its employees' base salaries by 15 percent, pointing to a strong recovery in the tech sector.
Hong Kong shares gained 0.5 percent in afternoon trade, tracking firmer overseas markets and ending five straight session of losses, led by consumer-related issues.
Fashion group Esprit and exporter Li & Fung both advanced while Chinese lender ICBC was up 1.47 percent and China Life gained 1.65 percent.
The benchmark Hang Seng Index gained 143.94 points, closing up 0.7 percent and rebounding from a 2-½ month closing low on Monday.
Southeast Asian markets tracked the region higher with the Straits Times Index jumping 1.3 percent while the KL Composite edged up 0.3 percent.
Singapore jewellery retailer Aspial was in the spotlight after saying its chief executive was being investigated for possible breach of the city-state's securities law. The stock rose over 3 percent on Tuesday despite the news.
More From CNBC.com:
- Get After-the-Bell Dow 30 Quotes
- Futures and Pre-Market Data
- Currency Data