In what was the first trading day of the new year for many regional markets, investors were encouraged by China's official Purchasing Managers Index, which rose to 50.3 in December, representing a return to expansionary territory after dipping below 50 in November, data released Sunday showed.
South Korea's Kospi Composite climbed 2.5%, while Hong Kong's Hang Seng Index added 2.1% and Australia's S&P/ASX 200 rose 1.2%. Markets in Japan, China, New Zealand, and Thailand were shut for holidays.
In Sydney, materials stocks led broad-based gains as investors took heart from China's PMI data as well as a decision by India's government Monday to increase its iron ore export tax. Fortescue Metals Group gained 2.6%, New Crest Mining rose 3.5% and Rio Tinto added 2.2%.
In foreign exchange markets, the euro rose against the U.S. dollar reflecting improved risk appetite, however gains were limited amid continued caution over the European sovereign-debt situation.
The single currency was at $1.2974, from $1.2930 late Monday, and at ¥99.73, from ¥99.49. The dollar was at ¥76.88, from ¥76.95.
Spot gold was at $1,579.10 per troy ounce, up $12.70 from its New York settlement on Friday. February Nymex crude oil futures were up $1.44 at $100.27 per barrel on Globex.