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Asia: Markets rally after Wall St lead, euro struggles

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[HONG KONG] Tokyo's Nikkei led a rally across Asian markets on Tuesday, boosted by a weaker yen while traders took heart from a healthy run on Wall Street, though German uncertainty kept pressure on the euro.

While concerns about the chances for US tax reform continue to nag, optimism about the global economy provided some buoyancy to equities, with all three main New York indexes closing higher.

However, with the Thanksgiving holiday shortening the US trading week analysts do not expect much more guidance from New York in the next few days.

Still, Tokyo was the standout performer, rallying one per cent by the break led by exporters as the dollar clawed back against the yen.

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The greenback was marginally up from its New York mark at 112.65 yen and sharply higher than the levels around 112 yen seen earlier Monday in Asia.

Among other markets Hong Kong pushed 0.9 per cent higher, Shanghai gained 0.6 per cent and Sydney was up 0.3 per cent. Seoul rose 0.4 per cent, Taipei put on 0.7 per cent while Manila and Jakarta were also stronger.

There was little negative reaction to news that Donald Trump had redesignated North Korea as a state sponsor of terror, promising Monday to increase sanctions on the pariah state.

On currency markets the euro edged down slightly as German Chancellor Angela Merkel struggled to form a government after months of horse-trading with other parties failed.

The leader of 12 years indicated on Monday she was ready to hold snap elections after the collapse of coalition talks at the weekend plunged Europe's biggest top economy into turmoil.

"Merkel said she didn't favour a minority government because it wouldn't bring the stability necessary to govern effectively," said Greg McKenna, chief market strategist at AxiTrader.

"That suggests more talks but an increased chance of fresh elections in early 2018. How that plays out is going to be interesting for the euro and certainly the Brexit process as well."

The single currency was slightly down against the dollar, while some market-watchers have warned it could sink as low as US$1.1160, despite an expected tightening of monetary policy by the European Central Bank.

Despite the troubles, Frankfurt's DAX index ended 0.5 per cent up.