In This Article:
* Asian stock markets: https://tmsnrt.rs/2zpUAr4Long-battered Australian financial shares jump
* Many Asian markets closed for Lunar New Year holiday
* Trump's State of the Union address due later in the day
By Hideyuki Sano and Tomo Uetake
TOKYO, Feb 5 (Reuters) - Asian stocks extended their gains on Tuesday as overnight strength on Wall Street and the Federal Reserve's dovish turn underpinned risk appetite, while the dollar held firm on last week's upbeat U.S. data.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent and hovered near its four-month high marked on Friday. Japan's Nikkei average was flat on the day but at its highest level in seven weeks.
Australian shares jumped 2.5 percent, with long-battered financials surging on short-covering after a special government-appointed inquiry excoriated Australia's financial sector for misconduct but left the structure of the country's powerful banks in place.
Elsewhere in Asia, trade was light, with markets in greater China, Taiwan, South Korea, Singapore and Indonesia all closed for the Lunar New Year.
On Wall Street, the S&P 500 gained, with technology and industrials the biggest winners as investors braced for another big week of fourth-quarter corporate earnings reports.
After the bell, Google operator Alphabet fell about 3 percent as its higher spending in the fourth-quarter worried investors even as its revenue and profits beat the Street's expectations.
MSCI's gauge of stocks across the globe reached a two-month high, having risen more than 13 percent from its near two-year low late in December, helped by the Fed's change of tack.
Fed Chairman Jerome Powell has signalled its three-year tightening drive may be coming to an end amid a suddenly cloudy outlook for the U.S. economy due to global growth concerns and the U.S.-China trade dispute.
The Fed said in a statement that Powell had told President Donald Trump and Treasury Secretary Steven Mnuchin late on Monday that policy will "depend entirely" on incoming economic information.
Data announced on Friday showed U.S. job growth surged in January while a key gauge of U.S. manufacturing sector showed surprising resilience after December's shocking fall, allaying fears the U.S. economy might be losing momentum quickly.
Hiroshi Nakamura, senior manager of investment planning at Mitsui Life Insurance, said financial markets' positive reaction to the U.S. data is diminishing with time, but hopes for a U.S.-China trade deal "will continue to support markets until the two sides come to formal decisions".