Bombay Durpun - Asian markets extend rally as optimism returns to trading floors

And while there remains a lot of volatility and uncertainty on trading floors owing to geopolitical tensions and the Omicron spread, analysts remain upbeat for the year.

With much of the region still closed for the Lunar New Year break, business was again thin, though the markets that were open enjoyed strong buying interest following an upbeat performance in Europe and New York.

Tokyo, Sydney, Wellington and Manila were all up more than one percent, while Jakarta was 0.8 percent higher.

After a torrid January, world markets have enjoyed a strong rally over the past three days with commentators saying the selling may have gone too far and traders were buying bargains.

The positive mood has been helped by positive economic readings and comments from Fed officials indicating that the bank should be considered in their tightening cycle, with recent suggestions for a 50 basis point hike in March seen as too hard, too early.

Markets strategist Louis Navellier said the remarks revived the belief that the Fed was still prepared to step in to support markets if they suffered too much.

Still, the idea of five or six increases before 2023 has been aired on several occasions as policymakers battle to rein in four-decade-high inflation.

Observers remain upbeat.

"Fed tightening is still the path forward," Dennis DeBusschere, of 22V Research, said. "But a short-term rebound in equities will continue -- led by growth and cyclicals -- as investors focus on a narrative of 'peak tightening' ahead of what is likely to be a weak payroll report."

Carley Garner, founder of DeCarley Trading, told Bloomberg Television that while "stocks probably have a little further to move on the downside before they find a bottom", she thought 2022 would still end on a healthy note for investors.

This is "going to be probably the year to buy any big dip across the board in anything: Treasuries, stocks, commodities, everything", she said.

Traders are now preparing for policy decisions from the Bank of England and European Central Bank later in the week, while the release of US jobs data on Friday will provide the latest snapshot of the world's biggest economy.

Oil prices continued to rise, with Russia-Ukraine tensions fanning supply worries, adding to expectations that the global economic reopening and recovery will spur further demand improvements.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 1.6 percent at 27,497.60 (break)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Dollar/yen: UP at 114.73 yen from 114.67 yen late Tuesday

Euro/dollar: UP at $1.1277 from $1.1269

Pound/dollar: UP at $1.3525 from $1.3519

Euro/pound: UP at 83.38 pence from 83.33 pence

West Texas Intermediate: UP 0.4 percent at $88.54 per barrel

Brent North Sea crude: UP 0.4 percent at $89.52 per barrel

New York - Dow: UP 0.8 percent at 35,405.24 (close)

London - FTSE 100: UP 1.0 percent at 7,535.78 (close)

F.Varghese--BD