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TPP deal, US rally lifts Asian stocks

Most Asian equities extended gains into a second session on Tuesday following another U.S. rally, while investors kept an eye on the region's central banks. Markets in China remain closed until Wednesday for National Day holidays.

On Wall Street, the Nasdaq closed up 1.5 percent while the S&P 500 and Dow both spiked nearly 2 percent, fueled by expectations that the Federal Reserve will refrain from tightening monetary policy this year after last week's poor jobs report.

As widely expected, the Reserve Bank of Australia (RBA) left interest rates unchanged at their record low of 2 percent on Tuesday and said it would keep monetary policy accommodative. Several analysts are now betting on a rate cut before year-end, with the interbank market pricing in a 60 percent chance of a 25 basis point cut in December, according to spread better IG.

Meanwhile, the Bank of Japan begins a two-day policy meeting, with an outcome due Wednesday.

News that the U.S., Japan and 10 other Pacific Rim countries reached an agreement on the five-years-in-the-making Trans Pacific Partnership (TPP) also boosted sentiment. The trade deal, called one of the biggest of its kind in a generation, could yield global annual benefits of $295 billion by 2025, according to the Peterson Institute for International Economics. However, the deal still needs final approval from U.S. Congress.

Read MoreWhy the 'Trans-Pacific Partnership' deal matters

"An accord among countries representing a large swath of the global economy sends a positive signal worldwide. The coordinated policy initiative represents a meaningful step towards much-needed structural reforms...increased market openness via trade policy reform on this scale can promote growth in a manner that compounds," HSBC said in a Tuesday report.

Symbol
Name
Price
 
Change
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NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Nikkei up 1%

Japan's benchmark Nikkei index ended at its highest level since September 17, rallying as much as 2 percent. Speculation among market participants is high that the Bank of Japan (BoJ) could announce a fresh round of monetary stimulus this month, possibly as early as Wednesday, amid contracting growth and deflationary consumer prices.

Among the stocks most likely to benefit from a TPP deal, chemicals maker Nihon Nohyaku and machinery component maker Iseki & Co closed up 2 and 0.5 percent respectively.

Farm equipment maker Kubota jumped 3 percent after rallying 7 percent earlier on reports it will more than double its dealer network in China.

ASX gains 0.3%

Australia's benchmark S&P ASX 200 ended at a two-and-a-half-week closing high, paring gains after hitting a near one-month peak at 5,220 points earlier in the session. In economic news, Canberra posted an August trade deficit of A$3.1 billion, much than estimates for a A$2.5 billion deficit.

Read MoreThis could give Australia's economy a fillip

Miners continued their rally, with Rio Tinto and BHP Billiton both more than 1 percent higher while Fortescue Metals spiked 6 percent.

Mining services firms also outperformed; Worley Parsons ended 6 percent higher while Boart Longyear rallied 3 percent.

Kospi adds 0.6%

South Korean shares rose to their strongest level since August 10, extending gains after closing at a more than two-week high in the previous session.

Index heavyweight Samsung Electronics climbed over 3 percent ahead of releasing earnings guidance on Wednesday.

Hong Kong dips 0.4%

The benchmark Hang Seng Index erased gains in afternoon trade after climbing to a more than two-week high above 22,000 points earlier.

Casino stocks continued their four-day winning streak; Melco International popped 7 percent while Sands China surged over 6 percent and Wynn Macau added 5.7 percent, bolstered by a 10 percent annual rise in the number of mainland visitors during the first three days of the 'Golden Week' holiday period.

Emerging markets higher

Indonesia's Jakarta Composite spiked nearly 3 percent to a one-month high as the rupiah hit a one-month peak against the greenback. Meanwhile, stocks in Singapore and the Philippines and jumped more than 1 percent each, tracking Asia-wide gains.