TOKYO Asian stocks touched a three-year peak on Tuesday, despite lingering concerns about crises in Ukraine and Gaza, while the yen eased against the dollar and the euro.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent to its highest since 2011, while Japan's Nikkei stock average rose about 1 percent after a national holiday closed markets on Monday.
"Investor sentiment has settled as the VIX has stayed calm," said Akio Yoshino, chief economist at equity research and strategy department at Amundi Japan.
The CBOE Volatility Index, which is a gauge of market risk aversion, jumped 32.2 percent on Friday in Asia, the biggest percentage rise since April 2013.
U.S. shares slumped overnight, as the rising global tensions offset some upbeat U.S. earnings. So far this reporting period, 66 percent of S&P 500 companies have topped Wall Street's profit expectations, according to Thomson Reuters data, above the 63 percent average since 1994.
But the three major U.S. indexes ended well off their lows, a sign that some appetite for riskier assets remained, and S&P 500 E-Mini futures edged higher in Asian trade.
Malaysia has reached an agreement with the leader of the separatist group to retrieve the bodies of the victims from last week's downing of a Malaysia Airlines passenger jet as well as the plane's two black boxes, Malaysian Prime Minister Najib Razak said on Tuesday.
Meanwhile, in the Gaza Strip, the Palestinian death toll jumped to more than 500 and Israeli losses mounted as well, as the United States stepped up efforts to secure a ceasefire.
Lower U.S. Treasury yields continued to weigh on the dollar on Tuesday, after safety-seeking investors bought U.S. government debt in recent days.
The yield on the benchmark 10-year U.S. Treasury note stood at 2.472 percent in Asia, not far from its U.S. close of 2.475 percent.
The yield on the 30-year Treasury bond inched down to 3.262 percent from its U.S. close of 3.264 percent On Monday, when it fell as low as 3.249 percent, the lowest since June 2013.
Investors also awaited U.S. consumer prices data due later in the session at 1230 GMT for clues as to the timing for monetary tightening by the Federal Reserve.
The Labor Department is expected to report that U.S. inflation eased slightly to 0.3 percent in June, after rising food prices pushed the index to its biggest increase in more than a year in May.
The dollar edged higher on the day against its Japanese counterpart to 101.48 yen, while the euro stood at 137.25 yen, off last Friday's five-month trough of 136.71 yen.
"Geopolitical developments channelled through higher oil prices will remain a key theme this week," said Shinichiro Kadota, chief FX strategist at Barclays Bank in Tokyo.
The euro was largely steady at $1.3524, pulling away from a five-month low of $1.3491 touched on Friday.
In commodities, U.S. oil for August delivery rose about 0.5 percent to $105.10 a barrel, bolstered by fears of escalating tension in the Middle East and as traders covered positions ahead of the contract's expiration later on Tuesday.
Spot gold was steady at $1,311.60 an ounce.
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Shri Navaratnam & Kim Coghill)