Asia stocks at 1-week highs on U.S. gains; oil up

Asian stocks struck one-week highs with investors undeterred by a powerful earthquake in Japan on Tuesday, but after Wall Street closed at a record peak they were also wary of chasing prices higher until President-elect Donald Trump picks his economic team.

Crude oil extended gains in Asian trading with U.S. West Texas Intermediate (WTI) up 1% in early deals as the dollar pulled back.

Prices surged 4 % to a three-week high on Monday, after comments from Russian President Vladimir Putin raised hopes that producer countries will reach a deal to limit output at a meeting next week. 

MSCI`s broadest index of Asia-Pacific shares outside Japan was up 1.2%, pulled up by a 1.3% rally in Australian shares. Korean shares and Hong Kong stocks also rose 1% each.

"Most of the flow into stocks seems to be retail-oriented with institutional investors preferring to sit out the rally unless they get a clearer picture on Trump`s economic team," said Andrew Sullivan, managing director, sales trading at Haitong International Securities Group in Hong Kong.

Trump met some officials and outlined plans for his first day in office on Monday, including withdrawing from a Asia-Pacific free trade accord and investigating abuses of work visa programs.

Such actions may lead to retaliation by trade partners like China and could potentially derail markets, Libby Cantrill, head of public policy at bond giant PIMCO, noted.

But for now, expectations that Trump`s administration will adopt expansionary fiscal policies have sent U.S. stocks to a record high, while belief that such policies will fuel inflation and lead to higher interest rates has pushed bond yields up, resulting in a stronger dollar.

On Monday, U.S. stocks closed at a record high and European markets moved higher.

Investors in Japanese stocks appeared unfazed by Tuesday`s e earthquake in northern Japan.

"Investors will react if more manufacturers are halting operations in their factories in the region, but right now the impact from the earthquake is limited," said Hiroaki Mino, director of investment information department at Mizuho Securities.

The benchmark Nikkei average was broadly steady and the yen ticked up a shade against the U.S. dollar, although still near a five-month low hit earlier in the session.

Trading volume was generally low ahead of the U.S. Thanksgiving holidays, with expectations of a U.S rate increase next month already priced in by markets.

The dollar, which rallied over 5% against a trade-weighted basket of currencies since Trump`s victory, consolidated its gains.

An immediate target for the index is seen at 101.80, a 61.8% retracement of its seven-year decline from 2001 to 2008. "There is a narrative that there will be strongleadership because

Republicans took the White House and the bothhouses of Congress. But we have to keep in mind that Trump alsodivided the nation as well as the Republicans," said DaisukeUno, chief strategist at Sumitomo Mitsui Bank.

The dollar`s mild weakness propped up gold prices with spot gold up 0.3% at $1217.70 per ounce. Prices have fallen 10% since the U.S. elections outcome. 

With markets moving higher, volatility indicators receded. A gauge for measuring market fear fell 3.4%.