Asia markets up after upbeat China factory data

However, a dip in Japanese business confidence highlighted the struggle ahead for the country's leaders in kickstarting the economy in the face of a growth slowdown in China and an expected US interest rate rise.

The gains come after global stock markets suffered their worst quarter since 2011, with trillions wiped of valuations since China devalued its yuan currency in August, sparking fears about the worldwide impact of China's struggles.

"Global risk sentiment is swinging between optimism and pessimism on a near-daily basis as nervous market participants evaluate whether the volatility seen in late August is just a bad memory or will prove to be a harbinger of larger trouble down the track," Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand, said in a client note.

"Markets will likely continue to zig-zag until we get a clear signal one way or another," she said, according to Bloomberg News.

China in the morning released data showing its Purchasing Managers' Index of manufacturing activity in September came in a little better than the previous month, though it was still near a three-year low.

While it showed the crucial sector was still in contraction, traders were cheered by the fact it had stabilised. A private reading on September factory activity last week came in at a six-and-a-half-year low, sending world stocks into paroxysms.

Dealers are growing increasingly concerned about China's woes following a string of weak data -- from manufacturing and investment to retail sales and trade -- despite five interest rate cuts since November.

August's devaluation also stoked worries about Beijing's ability to control the crisis.

Regional players were given a positive lead from New York, where the three main indices clawed back slightly from hefty recent losses.

The Dow rose 1.47 percent, the S&P 500 gained 1.91 percent and the Nasdaq jumped 2.28 percent.

In Asian markets Tokyo rose 1.74 percent by lunch, Sydney gained 1.53 percent, Seoul was 0.77 percent higher and Singapore added 0.33 percent.

Hong Kong and Shanghai were closed for a public holiday.

The upbeat mood helped higher-yielding, or riskier, assets sending the dollar lower. In morning trade the greenback was down against the Australian dollar, South Korean won, Indian rupee and Malaysian ringgit. The Thai baht and Indonesia's rupiah also advanced.

However, emerging market units are still well down against the dollar owing to expectations the Federal Reserve will lift interest rates before 2016, leading dealers to withdraw cash back to the United States looking for better, safer returns.

The US will release key employment data on Friday, which will provide more clues about the Fed's plans for hiking borrowing costs ahead of a meeting at the end of the month.

Japanese investors brushed off news that the closely-watched Tankan survey of manufacturing sentiment eased in the July-September quarter.

The data is the latest evidence that Prime Minister Shinzo Abe's plan to boost the economy with big spending and monetary easing is faltering. It also will likely up pressure on the Bank of Japan to increase its stimulus programme.

Marcel Thieliant, economist at Capital Economics in Singapore, said the survey confirmed fears that the world's third-largest economy could slip into recession.