It came after Wall Street stocks retreated from records as markets weighed muted US inflation data, mixed bank earnings and the jump in oil prices.

Tokyo was up 1.6 percent, adding to Tuesday's gains driven by expectations that Prime Minister Sanae Takaichi will soon call a snap election, while the yen slumped to its lowest value since July 2024.

Approval ratings for Takaichi's cabinet are around 70 percent, but her ruling bloc only has a slim majority in parliament's lower house, hindering its ability to push through her ambitious policy agenda.

Taipei, Wellington and Jakarta each posted gains of less than one percent, but Sydney, Seoul, Mumbai, Singapore and Malaysia were down.

Shanghai rose one percent and Hong Kong was up 0.7 percent after China said that trade last year reached a "new historical high".

The price of oil stabilised after an overnight surge as US President Donald Trump announced steep tariffs on anyone trading with Iran, sparking expectations that the threat will restrict supplies of crude.

Iran makes up three percent of global oil production, analyst Michael Wan of financial group MUFG noted earlier.

Gold rose after Trump warned of unspecified "very strong action" if Iranian authorities go ahead with threatened hangings of some protesters.

International outrage has built over the crackdown that a rights group said has likely killed thousands during protests posing one of the biggest challenges yet to Iran's clerical leadership.

- Fed cuts -

In the United States, the consumer price index rose 2.7 percent last month, the same rate as in November and in line with expectations.

While the inflation report keeps alive the prospect of interest rate cuts by the Federal Reserve in 2026, US equities tripped into negative territory as Tuesday's session progressed.

"Overall, we still think that the Fed will cut rates more and faster than what is priced by markets right now, and on top of contained inflation pressures a softer labour market through 2026 will also be key for our view," said MUFG's Wan.

"Continued attacks on Fed independence and Trump's proclivity to push for lower rates is another key reason behind our view and we forecast US Fed funds rates to fall below three percent" by the third quarter of 2026, he wrote.

Traders will also be keeping an eye on a possible US Supreme Court ruling on Wednesday on the legality of Trump's sweeping tariffs.

A ruling against the government would prove a temporary setback to its economic and fiscal plans, although officials have noted that tariffs can be reimposed by other means.

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: UP 1.6 percent at 54,388.37

Hong Kong - Hang Seng Index: UP 0.4 percent at 26,945.27

Shanghai - Composite: UP 0.9 at 4,174.29

Euro/dollar: DOWN at $1.1639 from $1.1643 on Tuesday

Pound/dollar: UP at $1.3430 from $1.3426

Dollar/yen: UP at 159.28 yen from 159.15 yen

Euro/pound: DOWN at 86.66 pence from 86.71 pence

West Texas Intermediate: DOWN 0.2 percent at $61.02 per barrel

Brent North Sea Crude: DOWN 0.2 percent at $65.37 per barrel

New York - Dow: DOWN 0.8 percent at 49,191.99 (close)

London - FTSE 100: FLAT at 10,137.35 (close)