Sawt Falasteen - Tokyo recovers some losses to lead markets higher

With Hong Kong and mainland Chinese bourses closed for a holiday after thundering higher over the past week on a raft of economic stimulus out of Beijing, focus was on Japan following the wipeout fanned by a strong yen.

The currency soared after Japan's Shigeru Ishiba -- who has backed the central bank's interest rate hikes -- won a vote Friday to lead the country's ruling party.

On Tuesday, the Nikkei climbed almost two percent, paring some of Monday's nearly five-percent drop, as the yen pulled back against the dollar and gave beaten-down exporters some much needed relief.

Data showing Japanese business confidence remained positive in the third quarter also provided a little support.

The yen weakened to more than 144 per dollar, having sat at less than 142 on Monday.

Traders were keeping an eye on Tokyo as Ishiba officially became prime minister Tuesday after a parliamentary vote, with plans to call a snap election for later in the month. They will be awaiting details on his plans to boost the economy, with investors concerned that he could unveil corporate tax hikes.

The yen's weakness came after Federal Reserve boss Jerome Powell indicated the bank would keep cutting interest rates but would take its time.

He told the National Association for Business Economics annual meeting in Tennessee that the battle against inflation was progressing and officials' two percent target was within range, adding that "broader economic conditions also set the table for further disinflation".

While he said that more cuts would come if the economy continued to perform as expected, he stressed the bank was not on a "preset course" and decisions would be made based on data.

"We're looking at it as a process that will play out over some time, not something that we need to go fast on," he added.

Ray Attrill at National Australia Bank said Powell was "clearly not ruling out the prospect of further 50-basis-points move(s) in future, and in which respect he highlighted that while still solid, the labour market really has cooled and that the job-finding rate has come down significantly".

Powell's remarks followed figures last week showing the Fed's preferred gauge of inflation slowed further in August, and ahead of key jobs figures out Friday that could determine how big the bank cuts at its next meeting.

"A somewhat weak headline jobs growth could propel markets to price in another 50-basis-point rate cut from the Fed in November," said Charu Chanana, head of forex strategy at Saxo Capital Markets.

All three main indexes on Wall Street rose, with the Dow chalking up another record and most of Asia following suit.

Wellington, Bangkok, Taipei, Manila, Mumbai Singapore and Jakarta all rose, but Sydney dipped.

London rose at the open while Paris and Frankfurt were lower.

Traders were also keeping tabs on developments in the United States after dockworkers at major ports along the US East and Gulf Coasts began a strike Tuesday after last-minute negotiations yielded no new labour contract.

There are worries the stoppage could cost the US economy billions of dollars a week and even affect global supply chains.

Shanghai, Hong Kong and Seoul were closed for holidays.

Shanghai's stock market jumped more than eight percent Monday -- its best day since 2008 -- and Shenzhen more than 10 percent, a day before Chinese markets shut for the Golden Week holiday.

- Key figures around 0715 GMT -

Tokyo - Nikkei 225: UP 1.9 percent at 38,651.97 (close)

London - FTSE 100: UP 0.1 percent at 8,246.30

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.1134 from $1.1137 on Monday

Pound/dollar: DOWN at $1.3370 from $1.3374

Euro/pound: UP at 83.27 pence from 83.25 pence

Dollar/yen: UP at 144.40 yen from 143.63 yen

West Texas Intermediate: UP 0.1 percent at $68.21 per barrel

Brent North Sea Crude: UP 0.1 percent at $71.78 per barrel

New York - Dow: UP less than 0.1 percent at 42,330.15 (close)

C.Hamad--SF-PST