Fresh hopes for a virus vaccine and another round of US stimulus lifted Asian markets on Wednesday, though gains remained tethered by the reimposition of containment measures and China-US tensions.

Investors took their lead from Wall Street's pop higher, which came after US biotech firm Moderna said the final stage of human trials for a COVID-19 vaccine would start at the end of the month, after a report said its first stage tests had been a success.

The news follows an announcement from Pfizer and BioNTech that two of four candidates for treatment had received "Fast Track" designation from US officials.

Providing added support was optimism the US would add to its stimulus after reports said top Republicans were reconsidering their opposition to it, including on extending supplemental unemployment benefits.

The trillions of dollars pledged by the US and other governments and central banks around the world have been a key driver of the rally in stock markets from their March lows.

And analysts expect that cash will probably fuel further gains, with Stephen Innes at AxiCorp saying even weak corporate earnings would be unlikely to derail that.

"A market that has ignored virus resurgence concerns and US-China tensions... is suddenly supposed to start worrying about earnings. That never made a great deal of sense to me.

"Sure, there may well be some profit-taking due to the run the market has been on, but we then go back to the wall of money argument time and time again. Booking profits are all very well and good, but the way this market seems to be heading, it is not clear you will be able to repurchase those stocks so readily again."

Tokyo went into the break 1.4 percent higher, while Sydney and Singapore also added more than one percent.

Hong Kong gained 0.6 percent while Seoul, Taipei, Jakarta and Wellington also rose.

But Shanghai and Manila fell.

Nervousness continues to permeate trading floors, however, as infections spike around the world, forcing countries that had been emerging from lockdowns to enforce new measures to contain the pandemic and jolting the economic recovery.

Officials in Hong Kong, which had gone weeks without a new infection, fear the city is about to be hit by a third wave, while Florida, which was one of the first states to lift restrictions, saw a new daily record of deaths Tuesday.

China-US relations -- already hit by a series of issues including trade and Huawei -- were strained further by Donald Trump's decision to remove Hong Kong's special trade status, and his signing into law of an act authorising sanctions on banks over China's clampdown in the city.

Donald Trump
China said it will retaliate after Donald Trump signed off on a bill authorising sanctions on banks over China's clampdown in Hong Kong Photo: AFP / JIM WATSON

Beijing responded to the Hong Kong Autonomy Act by saying it would "make necessary responses to protect its legitimate interests, and impose sanctions on relevant US personnel and entities".

"In the longer term, this adds another needless layer of uncertainty to already frosty Sino-US relationships, especially with regards to trade," said Justin Tang, head of Asian research at United First Partners.

"Against the backdrop of COVID-19-related disruptions, an escalation of trade wars will plunge supply chains into further disarray."

Tokyo - Nikkei 225: UP 1.4 percent at 22,912.24 (break)

Hong Kong - Hang Seng: UP 0.6 percent at 25,635.22

Shanghai - Composite: DOWN 0.4 percent at 3,400.92

West Texas Intermediate: UP 0.6 percent at $40.51 per barrel

Brent North Sea crude: UP 0.5 percent at $43.12 per barrel

Euro/dollar: UP at $1.1409 from $1.1392 at 2040 GMT

Dollar/yen: DOWN at 107.25 yen from 107.28 yen

Pound/dollar: UP at $1.2580 from $1.2551

Euro/pound: DOWN at 90.70 pence from 90.76 pence

New York - Dow: UP 2.1 percent at 26,642.59 (close)

London - FTSE 100: UP 0.1 percent at 6,179.75 (close)

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