Most Asian markets rise as US data feeds rate-cut hopes
Investors were also keeping track of developments in Donald Trump's trade war and signs of movement on possible talks between the US president and his Chinese counterpart Xi Jinping.
Wall Street provided an uninspiring lead as a report by payroll firm ADP showed private-sector jobs rose by 37,000 last month, a sharp slowdown from April's 60,000 and less than a third of what was forecast in a Bloomberg survey.
Another survey showed activity in the services sector contracted in May for the first time since June last year.
The readings stoked concerns that the world's number one economy was stuttering, with the Fed's closely watched "Beige Book" study noting that "economic activity has declined slightly".
It flagged household and business caution caused by slower hiring and heightened uncertainty surrounding Trump's policies.
However, the readings ramped up bets on a Fed cut, with markets pricing in two by the end of the year, with the first in September.
Eyes are now on the non-farm payrolls release on Friday, which the central bank uses to help shape monetary policy.
Still, there is some concern that the US president's tariff blitz will ramp up inflation, which could put pressure on the Fed to keep borrowing costs elevated.
Most of Asia rose in early trade, with Hong Kong, Sydney, Singapore, Taipei and Wellington up. Shanghai was flat and Tokyo fell ahead of a closely watched Japanese government bond auction.
Seoul rallied more than two percent on continued excitement after the election of a new president ended a six-month power vacuum. The won rose around 0.4 percent, building on a recent run-up.
Jakarta edged higher as Indonesia's government began rolling out a $1.5 billion stimulus package after Southeast Asia's biggest economy saw its slowest growth in more than three years in the first quarter.
The possibility of US rate cuts hit the dollar Wednesday and it struggled to recover in Asia, making small inroads against the yen, pound and euro.
Investors are awaiting news of talks between Trump and Xi, with the White House saying they could take place this week.
But while tariffs remain a millstone around investors' necks, IG's chief market analyst Chris Beauchamp said traders seemed less concerned than they were after the US president's April 2 "Liberation Day" fireworks.
"With markets still rising, the overall view appears to still be that the US is no longer serious about imposing tariffs at the levels seen in April," he wrote in a commentary.
"President Trump appears fixated on a call with China's president that might help to move the situation forward, but Beijing remains wary of committing itself to any deal.
"This does leave markets open to another sudden shock, which might replicate some of the volatility seen in April. But that manic period appears to have dissuaded the administration from further major tariff announcements."
Key figures at around 0230 GMT
Tokyo - Nikkei 225: DOWN 0.2 percent at 37,658.46 (break)
Hong Kong - Hang Seng Index: UP 0.9 percent at 23,871.21
Shanghai - Composite: FLAT at 3,374.87
Euro/dollar: DOWN at $1.1415 from $1.1417 on Wednesday
Pound/dollar: DOWN at $1.3546 from $1.3548
Dollar/yen: UP at 142.94 yen from 142.86 yen
Euro/pound: UP at 84.27 pence from 84.26 pence
Brent North Sea Crude: FLAT at $64.88 per barrel
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