The swing in sentiment left the dollar wallowing at one-month lows, with the euro rising to its highest since April 25.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5 percent in early trading, the biggest gain in a week, buoyed by a 1.2 percent rebound in resources-heavy Australian shares, a 2.8 percent jump in Hong Kong stocks and a 0.7 percent rise for blue chips in mainland China.

Japan's Nikkei advanced 1 percent.

The Hang Seng tech index opened 4.5 percent higher, as first quarter revenues from tech giant Alibaba and Baidu beat forecasts.

The United States will not block China from growing its economy, but wants it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that didn't come as a surprise to investors and political analysts.

Wall Street closed sharply higher overnight after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Fed encouraged buyers.

The Dow Jones Industrial Average rose 1.61 percent, the S&P 500 gained 1.99 percent, and the Nasdaq Composite 2.68 percent.

Upbeat guidance from retailers such as Department store operator Macy's Inc, discount chains Dollar General Corp and Dollar Tree appeared to offset dour warnings from their peers in recent weeks.

"Despite the fact that the five-day gains on Wall Street now at and above 4 percent suggests that the meltdown has been snapped, there should be no mistaking that this is but earnings relief and should not prematurely inspire proclamations of a bull market reboot," said analysts at Mizuho Bank.

Tapas Strickland, a director of economics and markets at NAB, said "equities are sitting in the glow of the FOMC Minutes on Wednesday where it appears markets have interpreted them as opening up the possibility of a Fed pause in Q4 2022, while some note the front loading of hikes may have tightened financial conditions sufficiently."

The Fed's minutes of its May meeting released on Wednesday confirmed two more 50-basis point hikes each in June and July, but policymakers also suggested the potential for a pause later in the year.

Still, the lift in equities has not split over to other asset markets with yields broadly steady, Strickland noted.

On Friday, the yield on benchmark 10-year Treasury notes rose slightly to 2.7649 percent compared with its US close of 2.758 percent on Thursday. It had hit a three-year high of 3.2030 percent earlier this month on fears rapid hikes from the Fed may undermine long-term growth.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 2.4879 percent compared with a US close of 2.488 percent.

"The fall in US Treasury yields in the meantime has correlated with falls in inflation expectations, which had been above 3 percent in the 10yr, and are now in the 2.6 percent area. All in all, a pronounced decompression of stress," said analysts at ING in a note.

Signs that aggressive Fed action may already be slowing economic growth are also emerging. Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell more than expected last week as the labor market remained tight. A separate report confirmed the US economy contracted in the first quarter. Read full story

In the currency markets, the US dollar 0.2 percent against a basket of major currencies, further pulling away from its 20-year peaks hit two weeks ago. The euro EUR= gained 0.26 percent against the greenback.

Oil prices eased slightly in early Asian trade after surging to a two-month high in the previous session as investors focused on signs of tight global supply.

US crude dipped 0.15 percent to $113.92 a barrel. Brent crude fell 0.1 percent to $117.27 per barrel.

Gold was slightly lower. Spot gold was traded at $1848.79 per ounce.