Asian shares extended their gains to fresh two-month highs on Friday as solid euro zone sovereign debt sales and signs of Greece moving closer to a vital debt-swap deal eased concerns over Europe's refinancing capability and boosted risk appetite.
Upbeat earnings from more US banks and data confirming the US economy stayed on a recovery track also helped underpin sentiment, which has been improving since the start of the year.
The MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3% and was set for a third weekly gain and a fourth straight session of increases.
Japan's Nikkei average opened up 1.3%.
US stocks rose on Thursday, with the Standard & Poor's 500 Index hitting a five-month high, on better-than-expected results from Morgan Stanley and Bank of America Corp.
On Thursday, Spain sold more longer-term debt than hoped, while France raised funds at yields lower than previous auctions in its first auction since Standard & Poor's knocked the country off its AAA rating last Friday.
This followed a strong result for a treasury bill auction earlier in the week from Portugal, the only euro zone country apart from Greece that is given junk status by all the major rating agencies.
"Market uncertainty has declined substantially in the past few days, with various implied volatility measures across assets falling to levels last seen in late July/early August 2011," analysts at Barclays Capital said in a research note.
"Better economic data, progress in the Greek negotiations and successful peripheral European bond auctions have bolstered market sentiment for the time being," they said.
With the European Central Bank's generous funding into the system helping to push euro zone bank-to-bank lending rates down to new 10-month lows on Thursday and soothing fears of an imminent credit crunch in Europe, the euro moved further away from a near one-and-a-half-year low hit last week.
The euro stood at $1.2958, not far from a two-week high of $1.2973 reached early on Friday, according to trading platform EBS.
Greece and its private bondholders resume debt-swap talks on Friday as they aim to overcome differences on interest payment that Athens must offer on its new bonds under the deal. Clinching the debt-swap deal is crucial for Greece to avoid a messy default.
If Greece reaches an agreement, "there is every chance the euro will move higher still," BNP Paribas analysts wrote in a client note.
Having cleared a key test of investor confidence for euro zone bonds, the market turns to data from China, the world's second-largest economy. HSBC's preliminary report on China's manufacturing activity for January is due later on Friday.
More encouraging signs emerged from the United States on Thursday, with data showing the number of Americans filing for new jobless benefits dropped to an almost four-year low last week, and factory activity in the mid-Atlantic expanded moderately.
Signs of recovering global demand for credit was also seen in the Asian credit markets, with spreads on the iTraxx Asia ex-Japan investment grade index narrowing by 7 basis points.
