Asian shares rallied to two-month highs on Wednesday as overnight gains in oil prices and a swath of positive economic data from Australia to the US calmed fears of a global economic slowdown.

Stock markets across the region were in the black, led by Japan and Hong Kong, with announcements from China this week of a cut in bank reserve requirements and structural reforms helping underpin sentiment.

The Nikkei was up 4 per cent and Hong Kong's Hang Seng Index by 2.6 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 2 per cent to its highest levels since Jan. 7, and building on gains in the previous session.

"While we remain cautious on the outlook, we don't think the global economy is going to tip into a recession," said Geoff Lewis, Hong Kong-based senior strategist at Manulife Asset Management. "Much of the bad news is already priced into markets offering investors areas of opportunity."

The Institute for Supply Management's (ISM) index of US factory activity, a closely-watched measure of the American manufacturing sector, rose more than expected last month. It also edged up for two months in a row, appearing to have snapped its almost continuous decline since late 2014.

U.S construction spending rose to the highest level since October 2007 while solid GDP data from Australia and Canada helped.

"Following the selloff and the fears of recession that emerged early in the new year, people pulled back aggressively from their previous expectations about how a rate hike from the Fed might unfold," said Stefan Worrall, director of Japan equity sales at Credit Suisse.

"Suddenly some of this lost confidence has been restored as we've seen a lot of recent economic data from the US beating expectations."

The data helped lift the US S&P 500 Index 2.39 per cent to an eight-week high of 1,978.35. Stock futures pointed to further gains.

MSCI's broadest gauge of the world's stock markets also rose to highest level in almost two months.

Even in credit markets, where high yield debt has been dumped by investors on worries of growing bankruptcies, an index measuring its performance has bounced by 7 per cent since mid-February.

Investors unwound bets in safe-haven assets such as government bonds, with the 10-year US Treasuries yield rising to 1.85 per cent on Tuesday from 1.740 per cent the previous day.

The policy-rate sensitive two-year yield rose to 0.847 per cent from 0.789 per cent.

US interest rate futures are pricing in the Fed funds rate of 0.65 per cent in January, effectively pricing in a full chance of a rate hike this year.

As the prospects of higher US rates burnished the dollar's yield attraction, the dollar's index against a basket of six major currencies briefly rose to a one-month high.

Against the yen, the dollar rose to 114.05 yen, recovering further from its double-bottom near 111 hit last month.

The euro hit a one-month low of $1.08340 on Tuesday, staying under pressure as investors expect the European Central Bank to step up monetary stimulus at its policy meeting next week. It last stood at $1.08635.

In the oil market, Brent crude futures hit eight-week high of $37.25 per barrel, up more than $10, or 37.5 per cent, from a 12-year low of $27.10 hit in January.

US crude futures also hit a one-month high of $34.76 per barrel although gains were cut in post-settlement trade on Tuesday after data suggesting a huge build in US crude stockpiles already at record high levels.

Market players are also keeping an eye on US Super Tuesday, where Donald Trump looked poised to strengthen his lead in the Republican presidential race. – Reuters