Asian stocks turned in a mixed performance on Thursday as the U.S. dollar sank against the yen and a private survey showed China\'s factory activity shrank for the first time in nine months in July.
The dollar index recovered some ground, after having fallen to a near two-week low as Federal Reserve Chair Jerome Powell indicated a possible interest rate cut in September.
Gold dipped from a two-week peak while oil extended overnight gains on signs of strong U.S. demand and due to growing Middle East tensions, with Iran reportedly ordering a retaliatory strike on Israel for killing a Hamas leader on its soil.
China\'s Shanghai Composite index dipped 0.22 percent to 2,932.39 after the Caixin manufacturing purchasing managers index fell to 49.8 last month from 51.8 in June. Hong Kong\'s Hang Seng index slid 0.23 percent to 17,304.96.
Japanese markets plummeted as the yen\'s further appreciation to the 148 level against the U.S. dollar clouded the outlook for the country\'s exporters.
The Nikkei average briefly plunged over 3 percent before ending 2.49 percent lower at 38,126.33, dragged down by auto, electronic and real estate stocks. The broader Topix index settled 3.24 percent lower at 2,703.69.
Toyota Motor slumped 8.5 percent despite posting a 17 percent rise in first-quarter operating profit, in line with expectations.
The yen hit a four-month high versus the dollar, a day after the BOJ chief signaled the possibility of a further interest rate hike.
Seoul stocks eked out modest gains, with the Kospi average rising 0.25 percent to 2,777.68 - extending gains for a second day running led by shipbuilders and battery shares.
Hanwha Ocean surged 6.7 percent, HD Korea Shipbuilding & Offshore Engineering rallied 2.9 percent, Samsung SDI jumped 4.5 percent and LG Energy Solution added 2.9 percent.
Australian markets ended at a record high for a second consecutive session, with miners and real estate stocks leading the surge ahead of next week\'s RBA\'s rate decision.
The benchmark S&P/ASX 200 rose 0.28 percent to 8,114.70 while the broader All Ordinaries index edged up 0.28 percent to 8,343.80.
Across the Tasman, New Zealand\'s benchmark S&P/NZX 50 index gained 0.67 percent to close at 12,487.94, crawling towards a 30-month high.
U.S. stocks rallied overnight as investors cheered Fed Chair Jerome Powell\'s dovish remarks and upbeat earnings from the likes of AMD, Starbucks and DuPont.
After keeping the key interest rate unchanged at a 23-year high, Powell said that recent progress on inflation and cooling in the labor market could put the September rate cut on the table.
The heavy Nasdaq Composite surged 2.6 percent, helped by a revival in tech stocks led by Meta and Nvidia.
The S&P 500 rallied 1.6 percent to post its best daily performance since February and the Dow edged up 0.2 percent.