The gains were also fuelled by a surge in regional tech giants as the artificial intelligence trade roared back into the spotlight after the head of Nvidia said the sector needed "trillions of dollars" more investment.

Markets have been whipped by volatility this week after the US president said at the weekend he would hammer several nations -- including Germany, France, Britain and Denmark -- with levies for their pushback against his grab for the North Atlantic island.

The threat sparked a warning of retaliation, with French President Emmanuel Macron raising the possibility of deploying an unused, powerful instrument aimed at deterring economic coercion, fanning fears of a trade war between the economic giants.

But traders breathed a sigh of relief on Wednesday when the US president told the World Economic Forum (WEF) in Davos that he would not take the Danish autonomous territory by force -- as he had hinted -- and later said he had retracted his tariff threat.

"We have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region," he wrote in a post on Truth Social, without providing details.

"Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st," he said.

The news fuelled a rally of more than one percent in US stocks, which had tanked on Tuesday on their return from a long weekend.

Asia followed suit, with Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Mumbai, Bangkok, Taipei and Manila all up.

Gold and silver, which have hit multiple records this week on a push into safe havens by worried traders, both fell on Wednesday and extended their retreat in Asia.

"After days of market fretting over Greenland turning from diplomatic curiosity into tariff ammunition, the president arrived in Davos and did what markets have quietly come to expect. He de-escalated. No force. No February tariffs," wrote SPI Asset Management's Stephen Innes.

He added that there was "enough ambiguity to preserve leverage, but enough reassurance to release the pressure valve. In trader terms, the market went from pricing a live grenade to pricing an option that expires sometime later".

Observers said there had been a pick-up in optimism among investors about the "Trump put" in which big losses in stocks would force the president to change course.

The advances in Asia were led by tech-heavy markets Tokyo, Taipei and Seoul, with the latter topping 5,000 points for the first time as chip companies enjoyed bumper gains.

The surge came after Nvidia boss Jensen Huang told the WEF that the infrastructure to develop and power generative artificial intelligence models will require much more cash.

He told delegates that today's AI boom "has started the largest infrastructure buildout in human history".

"We're now a few hundred billion dollars into it... there are trillions of dollars of infrastructure that needs to be built out" in fields including energy, cloud computing and electronics.

South Korean chip leaders Samsung and SK hynix gained around two percent, while in Japan tech investment giant SoftBank piled on more than 11 percent, with chip firms Advantest five percent higher and Tokyo Electron up more than three percent.

Japanese precision tools maker Disco Corporation is trading up 17 percent in Tokyo after stronger-than-expected earnings.

TSMC was up more than one percent in Taipei.

- Key figures at around 0700 GMT -

Tokyo - Nikkei 225: UP 1.7 percent at 53,688.89 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 26,599.63

Shanghai - Composite: UP 0.1 percent at 4,122.58 (close)

Euro/dollar: UP at $1.1688 from $1.1683 on Wednesday

Pound/dollar: UP at $1.3422 from $1.3418

Dollar/yen: UP at 158.78 yen from 158.43 yen

Euro/pound: DOWN at 87.05 pence from 87.08 pence

West Texas Intermediate: DOWN 0.1 percent at $60.56 per barrel

Brent North Sea Crude: DOWN 0.2 percent at $65.12

New York - Dow: UP 1.2 percent at 49,077.23 (close)

London - FTSE 100: UP 0.1 percent at 10,138.09 (close)

dan/pbt

NVIDIA

Samsung Electronics

SOFTBANK GROUP

ADVANTEST

TOKYO ELECTRON

TSMC - TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY

INDEX CORP.

Dow