The US dollar weakened, helping metals halt the longest run of losses in 25 years. Gold rose over one per cent to $US3,120 per ounce after posting its biggest one-day gain in 18 months in the wake of abrupt shifts in US tariff policy. Oil resumed losses after rebounding from a four-year low in the previous session.
Japan's Nikkei enjoyed its biggest daily gain since August 6, while a broader gauge of Asia-Pacific stocks excluding Japan rose 4.4 per cent.
The Nikkei average soared 9.13 per cent to close at 34,609 and the broader Topix index settled 8.09 per cent higher at 2,539.40.
China and Hong Kong shares ended higher as investors pinned their hopes on talks between the world's two largest economies as well as on market and policy support from state firms.
China's blue-chip CSI300 Index closed 1.3 per cent higher, while the Shanghai Composite Index rose 1.2 per cent. Hong Kong's benchmark Hang Seng was up 2.1 per cent.
The rise in Hong Kong shares followed a six per cent surge in Chinese internet companies listed on the US market overnight as Trump escalated tariffs on China to 125 per cent from the 104 per cent level that took effect on Wednesday.
"Even though it's obvious that the tariffs are targeting China, there is still some room for manoeuvring and negotiations if they can pause tariffs on other countries," said Jason Chan, senior investment strategist at Bank of East Asia.
"Markets still have some hope that at least some discussions could take place."
Kai Zhan, international partner at Chinese law firm Yuanda, said announcements overnight showed "Trump is using tariffs as a negotiation tactic rather than acting irrationally."
Zhan said the market was also expecting that the White House's temporary tariff exemptions for other countries provided China with opportunities to reroute its exports.
The onshore yuan fell to its weakest level since December 2007 at 7.3518 per dollar.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a two per cent band, at its lowest level since September 11, 2023.
A steep selloff in US bonds this week also showed some signs of easing on Thursday.
The benchmark 10-year Treasury yield dropped 10 basis points (bps) to 4.2985 per cent, having touched a high of 4.5150 per cent in the previous session.
A violent US Treasury selloff in the previous sessions, evoking the COVID-era "dash for cash", had reignited fears of fragility in the world's biggest bond market.
"It makes sense to apply some uncertainty discount on US risk assets," said Forvis Mazars's Lagarias.
German Bunds, which had acted as the lone safe haven in the bond markets, sold off on Thursday. The 10-year yield was up 8 bps at 2.659 per cent while the two-year rose 14 bps to 1.855 per cent.
Elsewhere, oil prices fell as investors fretted about the continued growth shock from the worsening Sino-US trade war. Brent crude futures were down 2.3 per cent at $US63.97 per barrel, while US crude fell 2.2 per cent to $US60.95.
Spot gold extended its climb and was last up 0.9 per cent at $US3,109 an ounce.
with DPA
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