Growing confidence about the global economy lifted Asian stocks to a fresh 17-month high on Tuesday as investors continued to be drawn to riskier assets, while the dollar stabilized after a weak start to the year.

The dollar <.DXY> steadied against a basket of major currencies <.DXY> after Monday's slide as upbeat manufacturing data from the United States, India and China bolstered optimism about a global recovery and encouraged buying of higher-yielding currencies, commodities and stocks.

Investors are seeking more risks thanks to better economic conditions, said Tsutomu Soma, senior manager of foreign securities at Okasan Securities in Tokyo, but added that could change if U.S. job data due on Friday disappoints.

Investors feel they need to have the employment data to confirm the U.S. economy is improving solidly, Soma said.

Japan's Nikkei share index <.N225> briefly hit a 15-month high, helped by resources-related shares after prices of copper, palladium and platinum surged on Monday to their highest levels since the summer of 2008.

By midday, the Nikkei was up about 1 percent.

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS>, which rallied about 68 percent last year, was up 0.8 percent at levels last seen in July 2008.

The strength of commodity prices also lifted stocks in resource-rich Australia, where mining stocks helped drive the benchmark S&P/ASX 200 index <.AXJ0> up 1 percent.

The Thomson Reuters index of regional shares <.TRXFLDAXPU> was 0.7 percent higher.

Asian equity investors were encouraged by gains on Wall Street where the Dow Jones <.DJI> rallied 1.5 percent on the first trading day of the year, reaching a 15-month closing high after the Institute for Supply Management's manufacturing index for December hit its highest level since April 2006.

However, David Spry, research manager at FW Holst in Australia, said the economic recovery in the United States, as well as in Europe, was still tepid and could limit the upside in equities.

I don't think we're going to get a strong, sustained upswing until those economies start to contribute a bit more down the track, Spry said.

KOREAN WON INTERVENTION

Investors continued to buy into the high-yielding Australian dollar, which hit a three-week peak at $0.9164 to the dollar.

In Korea, foreign exchange authorities were spotted intervening to stem the won as it rallied to a 15-month high at 1,146 to the dollar.

Expectations that the central bank could soon raise interest rates are driving the currency following a string of bullish data on Asia's fourth-largest economy over the past few days.

Exceptionally cold weather in the United States and other big consuming nations pushed oil prices up to near $82 a barrel.

Gold was trading at $1,120.70 an ounce after hitting $1,123.40 on Monday, its highest level since December 17, as the declining dollar triggered buying.

(Additional reporting by Sonali Paul in MELBOURNE and Rika Otsuka in TOKYO; Editing by Kim Coghill)

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