Asian equity markets rallied Thursday, while oil prices enjoyed a rare fillip following a surge in New York and Europe on strong US data and expectations for fresh eurozone stimulus measures.
Confidence was also given a much needed boost by minutes from the US Federal Reserve's December meeting suggesting it will not hike interest rates before April.
Tokyo rallied 1.67 percent by lunch as the yen gave up recent gains against the dollar, while Hong Kong added 0.88 percent, Sydney added 0.77 percent and Seoul surged 1.14 percent. However Shanghai was flat after already climbing more than four percent so far this year.
The advances come as welcome relief for global markets, which have been hammered by a slump in oil prices and growing fears that Greece could exit the eurozone as an anti-austerity party looks set to win this month's general election.
Investors were given a lift after data showed consumer prices in the eurozone fell in December for the first time since October 2009, at the height of the financial crisis.
The news, raising fears the bloc is about to slip into a deflationary spiral, fuelled expectations the European Central Bank will embark on a vast bond-buying programme known as quantitative easing (QE).
"(ECB chief) Mario Draghi will find it very difficult to deny" that deflation is negatively affecting the eurozone "and this could force him to fire up the printing press", said IG analyst David Madden.
However, the likelihood the ECB will begin pumping out extra cash pushed the euro to $1.1802 at one point on Wednesday, its lowest since January 2006.
On Thursday it bought $1.1827, down from 1.1842 late in New York. It also fetched 141.56 yen compared with 141.70 yen in US trade.
- 'No excuse for ECB' -
The dollar was at 119.64 yen compared with 119.17 yen in New York.
"The inflation data is taking a toll on the euro," Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ in New York, told Bloomberg News.
"I can't think of any excuse for the ECB not to act (at its next policy meeting) in January."
Adding to selling pressure on the single currency was the release of Fed minutes showing its board members would remain "patient" when deciding when to hike interest rates, indicating the process was unlikely to begin "for at least the next couple of meetings". This, analysts say, suggests April at the earliest.
Wall Street rallied on the report after suffering a five-day sell-off. The Dow added 1.23 percent, the Standard and Poor 500 gained 1.16 percent and the Nasdaq rallied 1.26 percent.
US shares were also helped by data showing the trade deficit shrinking sharply to its smallest size in nearly a year and the private sector adding a higher-than-expected 241,000 jobs in December.
Oil prices rose for a second day, helped by the gains across equity markets.
US benchmark West Texas Intermediate for February delivery rose 41 cents to $49.06 and Brent North Sea crude edged up 23 cents to $51.38. However, economists remain wary and warn they could resume their downtrend from five-and-a-half-year lows.
Gold fetched $1,213.93 an ounce, compared with $1,214.38 on Wednesday.