Most Asian markets rose Monday after Donald Trump showed signs of conciliation in his trade wars but investors remain on edge over the China-US standoff with some concerns that talks between the two have stalled.
Sydney led gainers and the Australian dollar rallied after a shock win for the business-friendly conservatives, while Japanese dealers were cheered by forecast-beating economic growth data.
However, the pound is wallowing around four-month lows on growing fears Britain will leave the European Union without a divorce deal.
Global markets have been in turmoil for two weeks since Trump threatened -- and later delivered -- a hike in tariffs on Chinese imports, to which Beijing retaliated and relit their debilitating trade battle.
The move also threw a spanner in the works for long-running negotiations between the economic superpowers that were thought to have been close to conclusion.
That was compounded by Trump's decision to bar Chinese telecoms firms from the US market and added Huawei to a blacklist restricting US sales to the firm.
But there was a sliver of hope after Trump on Friday removed steel tariffs on Canada and Mexico and announced a six-month delay in imposing steep tariffs on auto imports as he seeks talks with Japan and the EU on the issue.
Most equity markets were in positive territory, with Sydney more than one percent higher following the surprise victory of Prime Minister Scott Morrison's Liberal-National coalition in weekend elections. The Aussie dollar also enjoyed support, climbing 0.7 percent against the greenback.
Tokyo ended the morning 0.3 percent higher, with traders taking heart from news that the Japanese economy expanded more than expected in the first quarter and improved slightly from the previous three months.
Seoul gained 0.6 percent, Wellington added 0.3 percent and Taipei was 0.4 percent higher.
However, Hong Kong shed 0.6 percent and Shanghai was off 0.8 percent, with Jakarta and Manila also down.
- Sterling under pressure -
Still, Michael Metcalfe, global head of macro strategy at State Street, said markets could be ready for a healthy bounce.
"Right now, cash levels are at quite elevated levels and investors have money to put back into the market," he told Bloomberg TV.
"That dry powder, that potential for cash to come back in, means that once we get a resolution of the trade war and once we start to see better economic data, as we've just seen in Japan for instance, then that money is going to get dragged back out of cash into the market."
The pound continued to struggle after the Labour opposition walked out of talks with Prime Minister Theresa May that were aimed at reaching a deal to leave the EU.
The news increases the chances Britain will crash out of the bloc on October 31, which most observers warn would hammer the economy.
May will next week try to push through parliament an agreement reached with her EU colleagues, but there is little hope for success after seeing it rejected three times already.
There are fears the premier will step down after another failure, which could open the way for a hardline Brexiter to take over and push for a no-deal exit.
Still, OANDA senior market analyst Jeffrey Halley looked on the bright side.
"With so much lost hope factored into the pound in the short-term -- and given Australia has just proved political miracles can happen -- a Theresa May rabbit from the hat could set the pound up for a mighty rebound," he said in a note.
On crude markets, both main contracts jumped more than one percent after OPEC kingpin Saudi Arabia and key producer UAE said they would stick to output caps agreed with Russia.
The news reinforced oil buying, with rising tensions between the US and Iran adding to concerns about supplies from the Middle East.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: UP 0.3 percent at 21,307.84 (break)
Hong Kong - Hang Seng: DOWN 0.6 percent at 27,773.32
Shanghai - Composite: DOWN 0.8 percent at 2,858.06
Pound/dollar: UP at $1.2740 from $1.2720 at 2040 GMT on Friday
Euro/dollar: UP at $1.1165 from $1.1156
Dollar/yen: UP at 110.25 yen from 110.02 yen
Oil - West Texas Intermediate: UP 94 cents at $63.70 per barrel
Oil - Brent Crude: UP $1.09 at $73.30 per barrel
New York - Dow: DOWN 0.4 percent at 25,764.00 (close)
London - FTSE 100: DOWN 0.1 percent at 7,348.62 (close)