Shares in Asian developed markets rose and the dollar and Swiss franc eased on Wednesday as investors bet that China's latest interest rate rise would not derail hopes of a sustained economic recovery.
Increased investor appetite for riskier assets was also evident in the bond market, with the five-year Japanese government bond yield climbing to a 15-month high, continuing a global trend of rising yields on government debt.
China raised interest rates by 25 basis points late on Tuesday, its second increase in just over six weeks. The timing was a surprise, coming on the final day of the Lunar New Year holiday, but investors had been expecting further tightening from Beijing to rein in stubbornly high inflation.

"Chinese policymakers' efforts to rein in overheating pressures are now seen in a relatively more positive light by global investors in that they will help slow growth to a more sustainable pace, while other engines of growth in the region begin to rev up," said Samarjit Shankar, analyst at BNY Mellon.

Mainland Chinese stocks on their first day of trading following a week-long break, see-sawed between positive and negative territory and Hong Kong shares opened firmer before dipping into the red.

Japan's Nikkei was up 0.2% after touching a 9-month high and Australia's benchmark index was also up 0.3%.

But MSCI's index of Asia Pacific shares outside Japan fell 0.4%, weighed down by a 1% decline in South Korean stocks, with market players reporting weakness in firms most exposed to China and a stronger won.

"The Chinese rate hike had been expected for some time," said Lee Sun-yeb, a market analyst at Shinhan Investment Corp in Seoul. "However, investors are reacting to it be offloading issues that are sensitive to forex swings and Chinese demand."