Summary The Nikkei clawed back some of its losses as the yen sank against the dollar.
HONG KONG (AFP) - Asian markets rose on Wednesday following a lead from Wall Street ahead of a Federal Reserve decision on its stimulus programme and as tensions over emerging markets eased.
The Nikkei clawed back some of its losses as the yen sank against the dollar, with confidence picking up after the central banks of India and Turkey hiked interest rates to counter a sell-off in their currencies.
Tokyo climbed 1.74 percent by the break, Hong Kong added 1.01 percent, Sydney gained 0.54 percent, Shanghai was 0.39 percent higher and Seoul was up 0.73 percent. Taipei was closed for a public holiday.
With the stability of emerging economies back on the agenda, dealers are waiting to find out what the Fed plans to do with its stimulus programme. Last month the Fed said it would reduce the bond-buying by $10 billion a month to $75 billion from January, citing an improved US economy.
While it has been credited with fuelling an investment boom in developing countries, there are fears that the removal of the cheap cash will lead to huge capital outflows.
Those fears were brought into focus last week when Argentina s peso slumped 14 percent against the dollar, leading to a sell-off in other emerging nations units such as Indonesia, India and Thailand. That in turn sent global markets tumbling.
However, tensions were soothed slightly on Tuesday after India and then Turkey -- whose currencies have come under pressure -- hiked their borrowing rates.
The Reserve Bank of India lifted its benchmark repo rate, at which it lends to commercial banks, by 25 basis points to 8.0 percent. Hours later Turkey hiked its overnight lending rate to 12 percent from 7.75 percent.
The dollar eased to 2.1784 lira, down from 2.2520 lira before the announcement, and well off its 2.39 lira peak on Monday. The rupee was at 62.55 to the greenback on Wednesday, against levels around 63.20 previously.
A more upbeat outlook helped the dollar rise against the yen, which is considered a safer bet in times of uncertainty.
In early Tokyo trade, the dollar fetched 103.23 yen against 102.97 yen in New York Tuesday.
The euro also inched up to 140.95 yen from 140.73 yen while also sitting at $1.3654 against $1.3667.
Daisuke Uno, strategist at Sumitomo Mitsui Banking Corp., told Dow Jones Newswires: "With Turkey and India raising interest rates and the US Fed set to make its decision on policy soon, markets are still cautious."
He said there was a 70 percent chance the Fed will cut its stimulus but added that it could wait until the next meeting. "The central bank is walking a very narrow tightrope, and dares not to further upset emerging markets."
Providing upward pressure to Asian markets was a lift in New York. The Dow rose 0.57 percent, ending a five-day losing streak, the S&P 500 jumped 0.61 percent and the Nasdaq added 0.35 percent.
Data showed US consumers gained confidence in the economy for the second straight month in January, with rising expectations for overall growth and earnings gains.
The Conference Board said its Consumer Confidence Index rose to 80.7, up from 77.5 in December and far better than the 58.4 in January 2013.
Oil prices dipped. New York s main contract, West Texas Intermediate for March delivery, eased 31 cents at $97.10 while Brent North Sea crude for March was down one cent at $107.40.
Gold fetched $1,252.53 at 0230 GMT, compared with $1,254.37 late Tuesday.
