Asian markets gain ahead of Lunar New Year holidays

Asian stocks jumped on Wednesday and the dollar sank as a surge in US manufacturing and strong company earnings convinced investors to pile back into riskier assets despite turmoil in Egypt.

Japan's Nikkei index rose 1.8% -- its biggest daily advance in around two months -- as the latest in a string of bullish US economic data pushed Wall Street to its highest levels in 2-1/2 years.

Hong Kong's Hang Seng Index climbed 1.8% in a shortened session, ahead of the long Lunar New Year holidays in much of Asia.. The index jumped higher with banks and property developers pacing the advance in the wake of solid overnight gains on Wall Street. Trading volumes were relatively light ahead of a long holiday-weekend. The benchmark Hang Seng Index climbed 1.8% at 23,909.

The dollar was stuck near its lowest level in three months against the euro as robust economic data eased concerns over Egypt and coaxed investors out of safe-haven assets. The euro rose to $1.3853 on trading platform EBS, a touch higher than late US levels.

The US manufacturing sector grew at its fastest pace in nearly seven years, data showed on Tuesday, but factories' costs are also rising and are being passed on to consumers, raising fears of both a spike in inflation and a slowdown in sales as buyers baulk at higher prices.

On Wall Street, investors capitalised on last week's pullback, sending the Dow to close over the psychologically important level of 12,000 for the first time since June 2008 and the S&P 500 to close above 1,300 for the first time since August 2008.

Markets in South Korea, China, Taiwan and Vietnam were closed for the Lunar New Year holidays this week.

The European markets too had a positive opening with FTSE registering a 0.9% gain, CAC up 0.4% and DAX adding 0.5%