SINGAPORE - Asian markets made cautious gains at the start of trading as investors followed a global rally, with oil prices holding near the lowest levels in weeks.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent, led by South Korean shares rallying as much as 2.1 percent. Japan's Nikkei 225 slid 0.3 percent, while S&P 500 e-mini futures nudged 0.1 percent higher.
Overnight, markets took confidence from data showing that US manufacturing activity increased to the highest level in more than four years in July, sending the Dow Jones Industrial Average to a record close.
"Risk markets have clearly turned a corner," said Chris Weston, head of research at Pepperstone Group in Melbourne. "If the constructive tone from European and US equity markets carries through, buyers should emerge early in the session and provide support for regional risk assets."
Oil prices made limited gains as trading resumed in Asia, with Brent crude up 0.6 percent at $84.29 a barrel, after falling to a three-week low on Monday.
Against the yen, the dollar was up 0.3 percent at 157.625 yen, rebuilding strength after coordinated intervention by US and Japanese authorities to prop up the yen last week.
The US dollar index, which measures the greenback's strength against a basket of six currencies, was pinned near the lowest levels of the past two months at 99.99.
The yield on the US 10-year Treasury bond was up 0.2 basis point at 4.684 percent.
Market pricing continues to indicate that September's Federal Reserve meeting will bring an increase to interest rates. Fed funds futures are pricing an implied 65 percent probability of a 25-basis-point hike at the US central bank's next two-day meeting ending on Sept 16, according to the CME Group's FedWatch tool.
Federal Reserve Bank of New York President John Williams said he remained optimistic that inflation pressures are on track to ease gradually, but said the Fed will hike rates if inflation doesn't slow.
In cryptocurrencies, bitcoin and ether both slipped 0.5 percent to $63,446.35 and $1,857.44 respectively.
