Underpinning the gains, economists remained optimistic about prospects for the Asian economies, driven by fast-growing China and India, dealers said.

But they said investors were still wary about the US housing sector after news that the number of bad mortgage loans is rising and causing deep financial troubles for firms that lent to borrowers with patchy credit histories.

There is also continued nervousness about the recent unwinding of carry trades -- where money is borrowed in countries with low interest rates such as Japan in order to invest in higher yielding assets elsewhere.

"Investors breathed a brief sigh of relief after seeing a rebound on Wall Street and bought back shares," said Masatoshi Sato, senior strategist at Mizuho Investors Securities, after US stocks ended higher on Wednesday.

"The second wave of turmoil appears to have eased but investors are still groping their way in the dark," he added, following the second rout of global markets since late last month.

Sato said that the extent of the risks from the US mortgage problems and the yen carry trade were uncertain.

Tokyo led the Asian markets up but ended off its highs, with the Nikkei-225 index adding 1.10 per cent after Wednesday's 2.92 per cent tumble.

Chinese share prices closed 1.56 per cent higher after declining nearly two per cent on Wednesday following a raft of economic data that raised concerns that regulators would have to take new measures to cool economic growth.

"A rebound in overseas markets helped support stocks here and fresh funds are still entering the market," said Shanghai Securities analyst Cai Junyi.

Other Asian markets also snapped back. Hong Kong firmed 0.70 per cent, Sydney won back 1.93 per cent, Taipei added 1.66 per cent and Seoul put on 1.39 per cent.

But Manila closed 1.0 per cent lower and dealers said further gains in the other markets might be limited with overall sentiment still cautious due to the concerns about the US economy.

"We expect higher volatility. We may want to wait for the major pullback to take place first before taking positions," said UOB Kay Hian research head Yang Sy Jian in Singapore.

European markets opened higher Thursday, with London's FTSE 100 index up 0.20 per cent at 6,013.00 points in early deals.

Overnight Wednesday, Wall Street opened on an ominous note a day after New York shares saw their worst losses since the February 27 rout, sending the blue-chip index briefly below 12,000 points for the first time since November.

But New York reversed course late in the day, with the Dow Jones Industrial Average closing up 57.44 points or 0.48 per cent at 12,133.40, rallying back after an intraday loss of 134 points.

Investors were also watching the outcome of the Opec meeting in Vienna later Thursday although they were not expecting the oil cartel to adjust its production quota of 25.8 million barrels per day.

Oil prices were higher in Asian trade Thursday ahead of the ministerial meeting, with New York's main contract, light sweet crude for April delivery, up 30 cents to 58.46 US dollars a barrel.

Agence France-Presse