SINGAPORE (Reuters) -- Most Asian stocks rose on Tuesday as credit fears eased, with the focus on earnings after gains on Wall Street, setting the scene for a positive start for European markets.
A pedestrian walks by a share prices board in Tokyo Monday.
Japan's Nikkei 225 index bucked the trend and dipped 0.2 percent on some weak corporate results and political uncertainty after an election defeat for the government at the weekend.
"Investors are finding it difficult to make moves because of earnings. More than 200 companies are set to report results on Tuesday," said Tsuyoshi Segawa, an equity strategist at Shinko Securities
Kyocera Corp. dropped nearly 7 percent as higher earnings failed to impress investors, while semiconductor shares such as Advantest Corp. fell after data showing a plunge in orders for Japanese chip-making equipment in June.
MSCI's index of Asia-Pacific stocks excluding Japan rose 1.5 percent, buoyed by a recovery in U.S. shares on Monday. Ratings agency Standard & Poor's had upgraded Morgan Stanley's debt, and a hedge fund that had been hit by tightening credit conditions was bailed out.
Asian markets were also boosted by companies reporting strong earnings, with Hong Kong's Hang Seng index up 1.3 percent as HSBC Holdings Plc's results showed its bad debt provisions were not as large as feared.
But investors remained cautious that ongoing U.S. subprime mortgage market woes could still spread to wider credit markets after U.S. shares had just suffered their worst week in nearly five years.
"It looks like markets will continue to rebound, though given that there's still a lot of uncertainty, it may be hard to expect strong gains," said Kim Hak-kyun, an analyst at Korea Investment and Securities.
Mining firms such as BHP Billiton were higher following gains in industrial metals prices.
Higher copper prices seen Monday continued onto the Shanghai futures market on Tuesday. The October copper contract was up over 1.5 percent, while LME tin hit a record high at $16,275 a tonne on the LME's electronic trading platform.
The dollar steadied at 118.90 yen, as risk aversion that had led to the unwinding of carry trades and supported the Japanese currency eased.
Investors had been closing out carry trades, in which they borrowed in low-yielding currencies such as the yen to buy higher-yielding assets, sending the dollar to a 3- month low of 118.02 yen on electronic trading platform EBS last week.
"The rebound in U.S. shares on Monday was not very strong. And if the Dow fails to rise today or wipes out all of Monday's gains, then the dollar could fall towards 118 yen and the euro towards 161 yen," said a dealer at a Japanese bank. The Chicago Board of Trade's volatility index, or VIX, a key measure of the market's risk perception, eased by nearly 14 percent on Monday to close at 20.87, after on Friday hitting its highest since April 2003.
Japanese government bond futures were slightly up at 133.15, as investors remained cautious about taking positions on expectations that the Bank of Japan could raise interest rates as soon as August.
A fall in Japan's jobless rate to a nine-year low of 3.7 percent in June suggested the central bank will raise interest rates as early as next month, although global market volatility in recent days has dented the near certainty many in the market had felt about this. E-mail to a friend 
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