With Barack Obama's victory in the U.S. presidential race, investors were hopeful he could focus renewed energy on tackling deteriorating conditions in the world's largest economy — a vital export market — that have dragged on growth around the world, analysts said.
"We are definitely upbeat now about the market direction. I think investors and funds will be coming in and buying aggressively until the end of year," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.
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"Investors also are hoping that Obama can make a number of changes to help the economy," he said.
Some of the gains were driven by relief that the political uncertainty was lifted with Obama's win. There was also a growing believe that, as the credit crunch eased, world equity markets could rally the rest of the year after last month's historic sell-off.
"It's an excuse for the market to rally, there's less political uncertainty and that gives investors more confidence in the short term," said Frank Gong, a Hong Kong-based managing director for JP Morgan Securities. "But technically it's more about the credit crisis settling down and the market's fear coming down."
Across Asia markets rose. Japan's Nikkei 225 stock average advanced 2.7 percent to 9,341.41, and Hong Kong's Hang Seng Index surged 5.7 percent to 15,196.87.
Australia's index rose 2.8 percent, and Singapore's key stock measure rising 4.1 percent.
The upswing followed Wall Street, where many investors looked past more signs of a slumping U.S. economy and piled into stocks in anticipation of a year-end rally.
The Dow Jones index staged its biggest Election Day rally ever, rising 305.45 points, or 3.3 percent, to close at 9,625.28. The broader indices also rose, with the Standard & Poor's 500 index up 39.45, or 4.1 percent, to 1,005.75, its first close over the 1,000 mark since Oct. 13.
Wall Street futures also were down a touch, suggesting U.S. markets would climb higher Wednesday. Dow futures were down 3 points at 9,584.
In Japan, a weaker yen boosted shares of major exporters including automakers and consumer electronics firms. Toyota Motor Corp. rose 8.1 percent, Canon Inc. jumped 11.7 percent and Sony Corp. advanced 6.3 percent.
The dollar was trading at 99.46 yen, up from the 98-yen zone the previous day in Asia.
Sanyo Electric Co. surged 18 percent after being untraded Tuesday due to a rush of buy orders triggered by weekend reports that the company may be bought by rival Panasonic Corp.
A Sanyo-Panasonic entity would create Japan's biggest electronics maker, surpassing Hitachi Ltd., and would also be among the biggest in the world. Officials from both companies denied Tuesday that any deal has been reached.
Oil prices retreated after surging above $70 a barrel overnight. Light, sweet crude for December delivery was exchanging hands at $68.88, down $1.65 cents, in Asian trade on the New York Mercantile Exchange.
Tuesday in Europe, Britain's FTSE 100 index rose 196.22 points, or 4.4 percent, to 4,639.50, while Germany's DAX gained 251.20 points, or 5.0 percent, at 5,278.04. France's CAC-40 jumped 163.12 points, or 4.6 percent, at 3,691.09.