Asian markets mostly rose Tuesday, tracking another rally in New York after last week's battering, but early gains were tempered and Tokyo ended down on lingering uncertainty and worries about further turmoil.

While some stability has returned to trading floors investors are keeping a nervous eye on the release this week of key US inflation data, which many fear could spark another round of blood-letting.

Global markets have been sent into spasms this month as the yield on US Treasury bills has risen to four-year highs, with Federal Reserve interest rates expected to be hiked further this year owing to a purring economy and rising wages.

There are also warnings that the yield on US T-bills could spike to 3.5 percent, according to Bloomberg News, which would mark a level not seen since 2010.

But Asian traders were on Tuesday broadly optimistic, though they pared morning gains.

Hong Kong rose 1.6 percent and Shanghai finished one percent higher as dealers in China begin to wind down ahead of the long Lunar New Year break.

Sydney climbed 0.6 percent, Singapore jumped more than one percent and Seoul was up 0.4 percent.

Jakarta, Manila, Bangkok and Wellington were also well up.

End of bull market

Dealers were given a positive cue from Wall Street and Europe, where all major indexes finished more than one percent higher.

Stephen Innes, head of Asia-Pacific trading at OANDA, said: “Equity markets have begun the week on a somewhat positive note picking up from Friday's rebound as bargain hunters have returned on the first sign of stability.

“The market is trying to find a positive equilibrium, and if we can get through this week's critical US (inflation data) relatively unscathed, then it would most certainly look as if last week was little more than a corrective episode rather than the commencement of a bear market.”

However, there is concern that another strong reading could spark more frenzied selling.

And Ronald Wan, chief executive at Partners Capital in Hong Kong, told Bloomberg News the recent record highs witnessed in many cities would not be seen again for a while.

“People didn't take the US stocks decline seriously in the beginning,” he said. “Global equities were at their peaks and people also ignored whether the elevated level” was supported enough by the economy. “The peak of this bull market” is behind us, he added.

On currency markets the dollar continued to struggle against the yen on lingering uncertainty, with investors seeking solace in the safe-haven Japanese unit. The pound and euro were also stronger.

The more positive mood also supported high-yielding currencies, with the Australian dollar, South Korean won, Thai baht and Mexican peso all higher against the greenback.

However, the South African rand was being sold on political uncertainty with local media reporting the ruling ANC had decided to remove scandal-tainted President Jacob Zuma as head of state.

Key figures around 0710 GMT

Tokyo – Nikkei 225: DOWN 0.7 percent at 21,244.68 (close)

Hong Kong – Hang Seng: UP 1.6 percent at 29,928.13

Shanghai – Composite: UP 1.0 percent at 3,184.96 (close)

Euro/dollar: UP at $1.2319 from $1.2291 at 2200 GMT

Pound/dollar: UP at $1.3845 from $1.3837

Dollar/yen: DOWN at 108.05 yen from 108.64 yen

Oil – West Texas Intermediate: UP 35 cents at $59.64 per barrel

Oil – Brent North Sea: UP 39 cents at $62.98 per barrel

New York – DOW: UP 1.7 percent at 24,601.27 (close)

London – FTSE 100: UP 1.2 percent at 7,177.06 (close)