KONTAN.CO.ID - HONG KONG. Asian shares rose on Tuesday in line with Wall Street's high note and bonds also rallied, boosted by dovish Federal Reserve remarks, while oil prices edged down after Monday's surge with the market remaining focused on the conflict in the Middle East.

MSCI's gauge of Asia Pacific stocks outside Japan was up 1.2% at 0135 GMT.

Japan's benchmark Nikkei average rose 2.4% while Australia's S&P/ASX 200 rose for a fourth straight session to gain 1.2%.

Top Fed officials indicated on Monday that rising Treasury yields could steer the Fed from further rate increases, helping to spur a rise in bond prices after those markets had been closed the previous day in the U.S. and Tokyo.

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Markets were keeping a close watch, however, on military clashes between Israel and the Palestinian Islamist group Hamas, after Hamas' surprise strike on Saturday that killed hundreds of Israelis.

The Israeli military has since said it called up an unprecedented 300,000 reservists and was imposing a total blockade on the Gaza Strip, raising expectations of a possible ground assault.

"It's pretty early days to assess the meaningful impact of what's happening in the Middle East and what it actually means for markets," said Kerry Craig, a global market strategist at JPMorgan Asset Management.

"If it takes a drawn-out time and we get more actors involved in it, obviously there's going to be a bigger market impact from that."

The Hang Seng Index and China's benchmark CSI300 Index opened up 1.2% and 0.5%, respectively.

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China's largest private property developer Country Garden Holdings warned on Tuesday morning that it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods, weighing on the country's beleaguered property sector.

U.S. stocks ended higher on Monday, with energy shares rising along with oil prices. The S&P 500 energy index ended up 3.5%.

The markets' initial reaction to the major geopolitical developments in the Middle East was a bout of risk aversion, analysts from National Bank of Australia said in a note.

"That said, it is interesting to note that the magnitude of the moves has been relatively contained and, in many instances, not all the moves have been sustained," they said.

Oil prices eased after climbing more than 4% on Monday. Brent crude fell 0.4%, to $87.75 a barrel as of 0136 GMT, while U.S. West Texas Intermediate crude eased 16 cents or 0.5% to $85.93 a barrel.

Spot gold gained 2% to $1,864.69 per ounce, after scaling a one-week high on Monday as investors sought safe havens.

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The dollar softened on Tuesday along with U.S. interest rate expectations.

Ten-year Treasury yields, which have been surging, fell more than 13 basis points to 4.6% at the open in Tokyo as bond prices rallied after Monday's holiday.

Editor: Yudho Winarto