Chinese stocks surged on Thursday after a week-long break as they tried catching up to a global rally, while most regional markets stepped back with Japanese equities hitting the skids on weak data.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.3 per cent. The index was on track to snap a 6-day winning streak that took it to a 1-1/2 month peak this week, propelled by a global surge in risk appetite as expectations of the Federal Reserve hiking interest rates this year ebbed.

Overnight on Wall Street, the S&P 500 soared to a 3-week high thanks to a bounce in biotechnology companies. Materials shares also enjoyed a positive session on the back of gains for precious metals.

The Fed opted not to hike rates in September in the wake of cooling global growth and fears of a deepening slowdown in China. And last week's soft US non-farm employment report prompted markets to scale back expectations that the Fed would hike rates later this year.

Japan's Nikkei lost 0.7 per cent after weak Japanese machinery orders and a stronger yen soured sentiment. Hong Kong's Hang Seng fell 0.6 per cent, South Korea's Kospi edged up 0.1 per cent and Australian shares gained 0.4 per cent.

Chinese stock markets, which have been hit by wild swings in recent months due to growth and policy worries, rallied after re-opening following an extended break since the since the end of September. Shanghai stocks rose 3.6 per cent.

"Arguably, two of the most important developments since China's holiday began is the weakness in the US employment data and, leaving aside the U.K., output of the major economies appeared to slow in August," wrote Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

"Although many market participants have shifted their expectations of a Fed hike out to March 2016, many Fed officials themselves continue to signal the likelihood of a rate hike before the end of the year."

Investors will have an opportunity to gauge the thinking of US central bank officials when the minutes of the Fed's September meeting, at which it opted not to hike rates, are released later in the day.

St. Louis Fed President James Bullard, Minneapolis Fed President Narayana Kocherlakota and San Francisco Fed President John Williams will also speak later on Thursday.

The dollar has wobbled since the weak US jobs data lessened the prospects of a near-term Fed rate hike. It was on track to post its third straight day of losses against the yen, which received a fresh lift on Wednesday after the Bank of Japan kept monetary policy steady.

The greenback dipped 0.1 per cent to 119.915 yen, having drifted down from the week's high of 120.575 struck on Tuesday.

The euro rose 0.2 per cent to $1.1255 trimming some of the losses suffered overnight on weaker-than-expected German industrial production data.

Upbeat British industrial output data boosted the sterling, which hovered near a 2-week high of $1.5340 hit the previous day.

Commodity currencies like the Australian and Canadian dollars also remained in good heart against the greenback, as the turn in Fed policy expectations drove up global risk appetite and prices of commodities like crude.

The Aussie traded at $0.7187 after reaching a near 3-week high of $0.7235 overnight. The currency got some support after the Reserve Bank of Australia left rates steady earlier this week and struck a less dovish tone than some had expected.

Crude resumed their rise after a US government report showing a large inventory build briefly halted its rally. US crude was up 0.4 per cent at $48.00 a barrel, edging back towards a 2-1/2 week high of $49.71 struck on Wednesday. – Reuters