TOKYO (REUTERS) - Asian shares advanced on Tuesday (July 21) as prospects of a deal by European Union leaders to jointly fund recovery of their economies and hopes for a coronavirus vaccine lifted risk appetite.
Japan's Nikkei rose 0.6 per cent while Hong Kong's Hang Seng Index gained 1.5 per cent. The Shanghai Composite Index dipped 0.1 per cent.
Australia's S&P/ASX 200 Index and South Korea's Kospi index gained 1.4 per cent.
Singapore's Straits Times Index was up 0.3 per cent at 11:28am local time.
On Wall Street, tech shares jumped after several days in the doldrums, pushing the Nasdaq Composite up 2.51 per cent to a record closing high on Monday. The S&P500 also hit a five-month peak.
Euro Stoxx 50 futures gained 0.25 per cent in Asian trade to stand near their highest since early March.
European Union leaders appeared close to agreement on a massive stimulus plan for their coronavirus-blighted economies, with EU Council President Charles Michel voicing confidence of reaching a deal on the 750 billion euro recovery fund.
"They are now discussing a compromise on how the fund will be distributed between grants and loans. The question is no longer whether we will have a fund or not," said Nobuhiko Kuramochi, market strategist at Mizuho Securities.
"The US will likely adopt stimulus by the first week of August. We don't know its exact size but I bet it will be something like US$1 to US$1.5 trillion."
Advisers to President Donald Trump and congressional Democrats were set to discuss the next steps in responding to the coronavirus crisis on Tuesday.
Although coronavirus infections have surged in recent weeks in the country's south and west, investors hope another economic package, which will come after US$3 trillion in stimulus earlier this year, will help the economy tide over a difficult period.
Hopes that vaccines against the COVID-19 disease might be ready by the end of year also supported risk assets, following promising early data from trials of three potential vaccines.
The positive mood, however, faces more reality checks later this month as earnings season will be in full swing in many countries in coming weeks.
"If companies give stronger guidance than market expectations, that will be positive for stocks. But is that really possible under the current uncertain environment?," said Tatsushi Maeno, senior strategist at Okasan Asset Management.
"I think we need to be cautious about stock markets in the near term."
In the currency market, the Chinese yuan inched up to hit its firmest since early March, helped by recent signs of recovery in the Chinese economy. The onshore yuan rose to as high as 6.9804 per dollar.
The euro stood near Monday's four-month high of US$1.14675 as traders looked to the final outcome of the marathon EU summit that started on Friday. It last traded at US$1.1459.
The yen was little moved at 107.19 to the dollar.
Gold held firm at US$1,818 per ounce, having hit a nine-year high of US$1,820.4 on Monday.
The metal retains its strength as an ultimate store of value as central banks around the world have committed themselves to an unprecedented level of money-printing to shore up pandemic-hit economies.
Brent crude ticked up 0.1 per cent to US$43.35 per barrel, while US West Texas Intermediate (WTI) was flat at US$40.94