Asian closed mixed on Tuesday, with most major markets extending Monday's global rally on easing Brexit concerns and gains in oil prices.
In Japan, the benchmark closed up 203.81 points, or 1.28 percent, at 16,169.11, retracing its early losses of more than 1 percent as the yen weakened against the dollar.
The Japanese yen earlier traded near a 22-month high at 103.57 against the dollar, before weakening to around 104.47 as of 2:24 p.m. HK/SIN. On Monday afternoon local time, the currency pair traded at levels near 104.69.
Major exporters retraced losses to close higher, with shares of Toyota up 1.24 percent, Nissan shares adding 0.45 percent while Sony shares rose by 2.43 percent. A stronger yen is usually a negative for exporters as it reduces their overseas revenue when converted into local currency.
Across the Korean Strait, the Kospi closed near flat at 1,982.70. Australia's ASX 200 advanced 17.60 points, or 0.33 percent, to 5,274.36, boosted by a 0.68 percent increase in the financials sub-index that accounts for nearly half of the broader index.
Major Australian banks - ANZ, Commonwealth Bank of Australia, Westpac and NAB - closed mixed, between down 0.31 percent and up 1.63 percent; banking stocks were mostly fueled by a higher finish in the European banking sector on Monday.
Chinese mainland markets finished lower, with the composite down 9.9 points, or 0.34 percent, at 2,878.90 and the Shenzhen composite finished lower by 19.40 points, or 1.01 percent, to 1,889.71. In Hong Kong, the was up 0.55 percent as of 3:05 p.m. HK/SIN.
"The markets have a myopic focus on one thing: the U.K. referendum vote," said Chris Weston, chief market strategist at spreadbettor IG.
Risk sentiment was given a fillip at the start of the week, after several new polls published in the United Kingdom (U.K.) at the weekend suggested a swing of momentum in favor of the 'remain camp'. The polling data saw sterling rally, stocks rise and bond yields come off of the record lows reached in the previous week.
At 2:30 p.m. HK/SIN on Tuesday, the pound traded at $1.4703, up from levels near $1.40 in the previous week.
But analysts also warned that markets have become "hyper-sensitive" to Brexit news, and that if any opinion polls before the June 23 referendum vote indicated a resurgence in the leave campaign's momentum, there could be another sell-off.
"The polls were not supposed to influence as much as they have," said Weston. "Overnight, we have seen a rampant position adjustment and an unwind of 'Brexit' hedges."
Oil prices pulled back Tuesday during Asian hours, after rising as much as 3 percent overnight. Global benchmark Brent was down 0.91 percent at $50.19 as of 2:33 p.m. HK/SIN, after gaining 3 percent overnight. U.S. crude was down 0.77 percent at $48.99 after adding 2.9 percent during U.S. hours.
Reuters reported data from market intelligence firm Genscape that pointed to a drawdown of 568,213 barrels at the Cushing, Oklahoma, delivery base for U.S. crude futures in the the week to June 17.
Energy plays in the region ended mixed, with Woodside Petroleum losing 3.53 percent, Inpex off 0.27 percent and Fuji Oil adding 1.35 percent.
Gold prices initially rose on the back of faltering risk appetite in early trade, but have since pulled back. erased gains to trade down 0.45 percent at $1,283.90 an ounce, as of 2:35 p.m. HK/SIN. The precious metal is also considered a safe-haven asset.
Government bond yields in Asia also rose as investors returned to riskier assets, with the yield on the 10-year Japanese government bond at negative 0.139 as of 2:36 p.m. HK/SIN. This compares with the record low of negative 0.202 reached last week.
The dollar weakened against a basket of currencies, with the dollar index trading at 93.576 in the afternoon Asia time, compared to levels near 95.300 late last week.
Investors will be watching the dollar closely as U.S. Federal Reserve Chair Janet Yellen kicks off her two-day congressional testimony with a scheduled session before the Senate Banking Committee on Tuesday morning. Some analysts expect she could emphasize on the need to be cautious on rate hikes.
The Australian dollar traded at $0.7476 compared to its last close at $0.7457.
Earlier, the Reserve Bank of Australia (RBA) released its June monetary policy meeting minutes.
The Goldman analysts said at the margin, the minutes flagged some pockets of concerns, "notably around weakening momentum in the retail sector, employment growth and the potential 'complication' of an elevated currency." The Goldman analysts added notwithstanding uncomfortably strong house price growth, they expect the RBA to be drawn into further easing to "mitigate the downside risks to growth and inflation and re-tightening in broader financial conditions."
The Indian rupee strengthened slightly against the dollar, with the dollar/rupee pair trading at 67.48 as of 2:58 p.m. HK/SIN; on Monday afternoon during Asian hours, the rupee saw its biggest one-day drop since May, trading at levels near 67.385, on the back of news that the Reserve Bank of India governor, Raghuram Rajan, would step down from his position in September.
"The Indian rupee's losses were limited amidst better global risk sentiment and an announcement of significant reforms on foreign direct investment restrictions," said Wei Liang Chang, a foreign exchange strategist at Mizuho Bank. Reports said India will now permit 100 percent FDI in its civil aviation and defence sectors.
Stateside, the closed up 129.71 points, or 0.73 percent, at 17,804. The S&P 500 gained 12.03 points, or 0.58 percent, to 2,083.25, while the composite gained 36.88 points, or 0.77 percent, to 4,837.21.