Asian Stocks Hit a 7-Month High, Tokyo Gains 2.7%

Asian shares climbed to their highest level in seven months Tuesday on fresh hopes the global recession is easing, and oil hovered at six-month peaks as supply concerns helped buoy up prices.

The U.S. dollar struggled, as did the yen, after both tumbled the previous day when a 3 percent gain in U.S. shares boosted investor confidence that the global downturn may be slowing, encouraging buying in commodity currencies and other majors.

Oil prices steadied around $59 a barrel after climbing on concerns about supply following unrest in Nigeria, where militants threaten to disrupt crude exports, and following a fire in a key U.S. refinery.

The greenback, which hit a two-month low against the yen on Monday before rebounding more than 1 percent, but lost ground to the Australian dollar , edging back towards a recent seven-month low. The Australian dollar also stood within sight of a recent seven-month peak on the yen, underpinned after Reserve Bank of Australia Governor Glenn Stevens said domestic interest rates were "pretty low" but then also cautioned against expectations for a quick recovery.

Japan's Nikkei 225 Average gained 2.8 percent to erase losses made the previous day, lifted by exporters such as Canon on a sharply weaker yen and easing worries about the U.S. economy and consumer spending.

South Korea's KOSPI gained almost 3 percent, hitting a 7-1/2-month closing high as techs advanced on renewed economic hopes, while a stronger won boosted steelmakers and banks including KB Financial Group.

Australian shares finished 2.2 percent higher, boosted by renewed optimism over the health of the global economy, with miners including BHP Billiton helping the market recoup the previous day's losses.

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In markets still trading, Hong Kong stocks rose 3 percent in a liquidity bounce, heading for a third straight day of gains, spurred by a rally on Wall Street and a surge in resources stocks on signs of a recovery in demand. Shares in HSBC rose 4.9 percent, partly helped by news that
China's cabinet had given approval to the Britain-based lender and Bank of East Asia to issue yuan bonds in Hong Kong.

Singapore's Straits Times Index climbed 3.5 percent. CapitaLand, up 6 percent, and NOL, up a whopping 10 percent, led the advance.

China's Shanghai Composite Index was higher, hitting a a nine-and-half-month intraday high at one point in active turnover, lifted by rising overseas markets while banks and property shares were strong as ample liquidity continued to buoy the market.