Metals added to their recent gains to hit new record highs, with silver up more than four percent, partly propelled by the prospect of interest rate cuts by the US Federal Reserve this year.

Tokyo closed 1.5 percent higher and the yen slumped to its lowest value since mid-2024 as media reports said Prime Minister Sanae Takaichi planned to hold an election as soon as February 8.

Takaichi's cabinet -- riding high in opinion polls -- has approved a record 122.3-trillion-yen ($768 billion) budget for the fiscal year from April 2026.

She has vowed to get parliamentary approval as soon as possible to address inflation and shore up the world's fourth-largest economy.

Hong Kong closed up 0.6 percent while Shanghai dipped 0.3 percent after Beijing said trade last year reached a "new historical high", surpassing 45 trillion yuan ($6.4 trillion) for the first time.

Global demand for Chinese goods has held firm despite a slump in exports to the United States after President Donald Trump hiked tariffs.

Other trade partners more than filled the gap, increasing Chinese exports overall by 5.5 percent in 2025.

"We expect this resilience to continue through 2026," said Zichun Huang, China economist at Capital Economics, in a note.

London, Frankfurt and Paris saw marginal gains at the open.

- Tariff ruling -

"One risk to the export outlook is that the trade truce with the US doesn't last," Huang added, referring to a detente that Washington and Beijing reached last year after a major escalation.

"Trump's threat to impose a 25 percent tariff on countries doing business with Iran underscores the potential for renewed trade tensions."

Sydney, Seoul, Taipei, Wellington, Jakarta, Bangkok and Manila were all in the green, while Mumbai, Singapore and Kuala Lumpur were down.

Gold spot hit a record high and silver topped $90 an ounce for the first time, partly on the shock news that prosecutors have reopened a probe into Federal Reserve Chair Jerome Powell.

"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, said analyst Michael Wan at MUFG.

Trump's warning of "very strong action" if Iranian authorities hang protesters has also contributed to a tense geopolitical backdrop.

Oil prices were lower after an overnight surge as the US president announced steep tariffs on anyone trading with Iran, sparking expectations that the threat will restrict supplies of crude.

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.

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 0815 GMT -

Tokyo - Nikkei 225: UP 1.5 percent at 54,341.23 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 26,999.81 (close)

Shanghai - Composite: DOWN 0.3 percent at 4,126.09 (close)

Euro/dollar: UP at $1.1645 from $1.1643 on Tuesday

Pound/dollar: UP at $1.3440 from $1.3426

Dollar/yen: FLAT at 159.15 yen

Euro/pound: DOWN at 86.64 pence from 86.71 pence

West Texas Intermediate: DOWN 0.8 percent at $60.66 per barrel

Brent North Sea Crude: DOWN 0.8 percent at $64.96 per barrel

London - FTSE 100: UP at 10,164.74

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