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Japan's Nikkei leads gains as Asia traders stay optimistic

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Hong Kong (AFP)

Japanese traders led fresh gains across most Asian markets on Tuesday following yet another record close in New York, with the dollar clawing back some of its recent losses on renewed hopes for Donald Trump's economic agenda.

With the North Korea issue put on the backburner for now and two hurricanes in the rearview mirror, investors turned their attention back to macro issues and particularly the Federal Reserve's policy meeting this week.

While not expected to lift interest rates, remarks from the bank and its boss Janet Yellen will be pored over for clues about future moves and its plans to wind down its vast stimulus programme put in place during the financial crisis.

Analysts said despite the expected rise in borrowing costs, investors were still piling into equity markets on renewed hopes that Trump can push through the market-friendly policies that helped drive a global rally at the start of the year.

"We are not overly concerned about" tightening, Merrill Lynch and US Trust head of fixed-income strategy Matthew Diczok told Bloomberg Television.

"If you model it out, over about the next three years they'll take out about $1.3 trillion or so. That’s only a third of what they put into the market. So it's going to be a very slow, very gradual, very deliberate and it shouldn’t lead to any near-term fireworks into the market at all."

- 'Trump trades' -

Talk of more stringent monetary policy supported the dollar, which is holding around 111.50 yen, while the pound rowed back from levels above $1.36 after the head of the Bank of England indicated possible British rate hikes could be slow and gradual.

The stronger dollar against the yen buoyed exporters on Tokyo's Nikkei, with the index up 1.5 percent by the break as traders also returned from a three-day break to play catch-up with Monday's global rally.

Shanghai gained 0.1 percent, while Singapore and Sydney each gained 0.2 percent. However, Hong Kong eased 0.2 percent after a more than one percent jump Monday, while Seoul dipped 0.1 percent.

The gains tracked another record close for the Dow and S&P 500 on Wall Street.

"The surge was yet another testament that the reinvigoration of the Trump trades is gaining traction," Greg McKenna, chief market strategist at AxiTrader, said.

"Recent happenings have seen Trump’s leadership change and it is clear markets are seeing that," he added.

Pointing to the recent face-off with North Korea and the president's handling of hurricanes Harvey and Irma, McKenna said Trump had come through them positively, which could hold him in good stead in dealing with future issues such as tax reform.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 1.5 percent at 20,197.56 (close)

Hong Kong - Hang Seng: DOWN 0.2 percent at 28,103.03

Shanghai - Composite: UP 0.1 percent at 3,366.96

Euro/dollar: UP at $1.1966 from $1.1954 at 2100 GMT

Dollar/yen: DOWN at 111.52 yen from 111.56 yen

Pound/dollar: UP at $1.3520 from $1.3501

Oil - West Texas Intermediate: UP 10 cents at $50.01

Oil - Brent North Sea: UP four cents at $55.52 per barrel

New York - DOW: UP 0.3 percent at 22,331.35 (close)

London - FTSE 100: UP 0.5 percent at 7,253.28 (close)

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