While the deadly disease continues to spread, traders have a rare semblance of optimism after weeks of carnage across global markets, with eyes fixed on Washington where lawmakers are thrashing out an emergency bill worth as much as $2 trillion -- around 10 percent of US gross domestic product.

"At this point, of the few outstanding issues, I don't see any that can't be overcome in the next few hours," top Senate Democrat Chuck Schumer told the chamber after meeting Treasury Secretary Steven Mnuchin.

The optimism, shared by Republican leaders and Mnuchin, was a ray of hope after partisan infighting had led to talks breaking down earlier this week.

The prospect of a massive spending splurge, combined with the Federal Reserve's pledge to essentially print as much cash is needed, sent Wall Street into overdrive Tuesday, with the Dow seeing its biggest percentage-point rise since 1933, while the S&P 500 enjoyed its best day in more than a decade.

And the gains spread into Asia, which rallied for a second straight day.

Tokyo went into the break 5.7 percent higher, Hong Kong, Sydney, Singapore and Wellington all gained more than two percent. Seoul and Taipei each climbed more than four percent and Manila piled on more than five percent. Shanghai was a little shy of two percent higher.

Adding to the more upbeat mood was the G7's promise to do "whatever is necessary".

The unprecedented moves are part of a worldwide response to the rapid financial shock caused by the COVID-19 outbreak, which has locked down countries including the US and brought the global economy to a juddering halt.

- Not out of the woods -

"Risk assets are enjoying a nice rebound as the market digests the Fed's broadening QE move into the corporate space while the prospect of a big US fiscal stimulus edges closer to fruition," said National Australia Bank's Rodrigo Catril.

Hopes for the US deal and the Fed's promise to ramp up its bond-buying, also sent the dollar lower, a relief to investors as demand for the unit had seen it soar against peers, including a 35-year high against the pound.

The crude market -- which has been hammered by the outbreak's impact on demand, as well as a price war between Saudi Arabia and Russia -- also enjoyed a much-needed lift, though analysts cautioned the commodity still faced uncertainty.

However, observers warned that world markets were not out of the woods just yet as the number of infections and deaths continues to rise rapidly and the full economic impact is still unknown.

"In 'buy the rumour, sell the news' fashion, the stock market could easily take another sharp leg lower once the good news is out, and investors conclude that it won't be enough (yet) to address what's going on in the real economy," said AxiCorp's Stephen Innes.

"Given the rapid succession of downgrades, we should likely expect more pain over the short term, as the situation in New York and California continues to deteriorate. And with the entire population of India going into a government-enforced a 21-day nationwide curfew, it doesn't suggest blue sky."

Still, he did say that the US package "should be sufficient to avoid buttress Main Street from falling into a worst-case depression type scenario".

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 5.7 percent at 19,129.21 (break)

Hong Kong - Hang Seng: UP 2.6 percent at 23,258.95

Shanghai - Composite: UP 1.8 percent at 2,772.03

Brent North Sea crude: UP 2.6 percent at $27.86 per barrel

West Texas Intermediate: UP 3.3 percent at $24.80

Euro/dollar: UP at $1.0791 from $1.0782 at 2100 GMT

Dollar/yen: DOWN at 110.84 yen from 111.32 yen

Pound/dollar: UP at $1.1771 from $1.1754

Euro/pound: DOWN at 91.67 pence from 91.75

New York - Dow: UP 11.4 percent to 20,704.91 (close)

London - FTSE 100: UP 7.5 percent at 5,367.45 points (close)

dan/mtp

NATIONAL AUSTRALIA BANK