Asian equities extended a relief rally into a second day Tuesday as traders were emboldened by an ebbing risk of clashes between the United States and North Korea, with safe haven assets continuing to lose ground. 

All major regional indices were glowing green, with prices jumpstarted by a strong performance on Wall Street and Europe and fuelled further as Pyongyang appeared to put on ice its plan to launch missiles near Guam. 

Markets also breathed a sigh of relief as senior US figures dialled down tensions over North Korea, after a war of words last week sparked global alarm.

Tokyo powered more than one percent higher by the break, with the weakening yen providing an extra boost to the Nikkei which had closed at its lowest level for more than three months Monday.

Hong Kong, Shanghai and Sydney were also well into positive territory while Seoul was closed for a public holiday.

"Tensions between the US and North Korea seemed to cool a little -- at least on the US side and that emboldened the bulls to buy stocks once again," said Greg McKenna, an analyst at AxiTrader. 

US stocks were solidly higher Monday, with the S&P 500 advancing one percent.

"US investors have found it difficult to ignore the potent combination of strong profit growth, low bond yields and a lower US dollar," said Ric Spooner, an analyst at CMC Markets in Sydney.

However, the dollar moved off recent lows after New York Federal Reserve Bank president William Dudley indicated another interest rate increase this year was likely and suggested the central bank would reveal plans to reduce its balance sheet next month. 

- 'Stupid conduct of Yankees' -

The greenback was back above 110 yen, after falling to eight-week lows below 109 yen as investors fled to safe haven assets at the height of the crisis last week.

The renewed focus on economic fundamentals came as calm returned to global markets and geopolitical tensions faded.

US Defence Secretary Jim Mattis and Secretary of State Rex Tillerson wrote in The Wall Street Journal that America has "no interest" in regime change in Pyongyang, and stressed the importance of a diplomatic solution to the crisis.

And North Korean leader Kim Jong-Un hinted Tuesday he would hold off on the plan to test-fire missiles towards the US Pacific island territory of Guam, saying he would "watch a little more the foolish and stupid conduct of the Yankees".

Investors also appeared to take in their stride a warning from China it "will not sit idle" if the US takes actions that impair trade ties after President Donald Trump launched a probe into Beijing's intellectual property practices.

On commodities markets, the safe haven asset gold was trading at about $1,275 an ounce, down from $1,292 reached last Friday.

US crude wallowed well below $48 a barrel after slumping Monday as fears of falling oil demand in China overshadowed news that Libya's crude supply was disrupted. 

"Last night it seems traders grasped the news of Chinese refinery runs hitting a 10-month low and sold hard," McKenna noted.

Chris Weston, chief market strategist at IG Markets, also pointed to expectations of rising US shale output and an increase in the US rig count as adding to downward pressure on oil prices. 

-- Bloomberg News contributed to this report --

 - Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 1.3 percent at 19,789.13 (break)

Hong Kong - Hang Seng: UP 0.5 percent at 27,392.53 

Shanghai - Composite: UP 0.6 percent at 3,256.65 

Euro/dollar: DOWN at $1.1783 from $1.1786  

Pound/dollar: DOWN at $1.2964 from $1.2967

Dollar/yen: UP at 110.18 yen from 109.67 yen

Oil - West Texas Intermediate: UP 7 cents at $47.66 per barrel  

Oil - Brent North Sea: UP 13 cents at $50.86

New York - Dow: UP 0.6 percent at 21,993.71 (close)

London - FTSE 100: UP 0.6 percent at 7,353.89 (close)