SINGAPORE, Apr 3 (Reuters) Tokyo's Nikkei rose to its highest since July 2000 and the broader TOPIX index hit a 14-year high after a central bank survey showed that, while the economy was recovering, a rate rise could still be some time away.
The Bank of Japan tankan survey showed that business confidence among Japan's big manufacturers slipped unexpectedly in the three months to March, but they reported an upbeat outlook and robust capital spending plans.
The yen fell as investors rushed to buy high-yielding currencies such as the Australian and New Zealand dollars at the start of Japan's new business year.
In Thailand, the baht currency inched down against the dollar after Prime Minister Thaksin Shinawatra failed to win a decisive mandate after a strong protest vote in Sunday's election, which was called to resolve a political impasse.
The Thai stock market <.SETI> was flat at the open and then edged down to be off 0.1 percent at the end of morning trade.
''With the bigger 'no' vote, people are thinking the economic plans may be delayed and that parliament cannot convene. That's why the market is reacting this way,'' said Bualuang Securities analyst Chaiyaporn Nompitakcharoen.
In Tokyo, the Nikkei ended up 1.60 percent at 17,333.31, having risen as high as 17,387.08 -- its highest since July 2000 -- while the TOPIX <.TOPX> finished up 1.53 percent, having reached its highest since January 1992 during trading.
Spread betters in London were calling the FTSE 100 <.FTSE>, CAC 40 <.FCHI>, and DAX <.GDAXI> indexes between 11 and 22 points higher.
Other Asian markets were also strong, with Hong Kong's Hang Seng Index <.HSI> breaking above 16,000 for the first time since February 2001 early in afternoon trade. The MSCI's index of non-Japan Asian shares <.MSCIAPJ> up 1.1 percent at 0600 GMT.
The tankan survey's headline diffusion index for big manufacturers' sentiment was plus 20, just below a reading of 21 in December and also below the market's median forecast of 23.
But sentiment among large non-manufacturers rose. The big manufacturers' diffusion index was also seen improving in June, helping to drive down the price of Japanese government bonds.
''Those who had expected a weak reading in tankan are buying back, especially in the futures market,'' said Tatsuyuki Kawasaki, director of the equities trading division at Kaneyama Securities.
Australia's main index <.AXJO> closed up 1.0 percent at a record high, buoyed by gains in uranium stocks such as Energy Resources of Australia Ltd. , newly listed Toro Energy Ltd. and Valhalla Uranium Ltd. on the signing of a deal that allowed China to import Australian uranium.
The world's top miner, BHP Billiton Ltd./Plc. added 3.5 percent after it completed a higher-than-expected A$2.25 billion share buyback.
South Korea's KOSPI <.KS11> rose to a two-month high before closing up 1.5 percent, as economic data bolstered tech firms such as Samsung Electronics <005930.KS>, and Daewoo Shipbuilding and Marine Engineering Co. <042660.KS> gained on new orders.
Taiwan's main index <.TWII> rose to a four-week high, closing up 0.7 percent, as technology shares <.TELI> led the way.
YEN WEAKER The yen weakened on the first trading day of the new Japanese business year as investors chased high-yielding currencies that had fallen in recent weeks. The dollar rose to three-week highs above 118.50 yen , up almost a yen from New York levels.
The euro extended its unwinding of last week's gains, falling to $1.2050 from around $1.2120 in New York on Friday.
Gold was more than $4 an ounce off last week's 25-year high of $588.70, but above lows hit in New York after commodity funds and speculators had booked profits on its powerful rally on Friday, the last day of the first quarter.
''There's been a flow of funds from U.S. bonds to gold, and that is providing support for the market,'' said Koji Suzuki, a market analyst at Livedoor Commodity.
Oil was trading at 66.83 a barrel at 0600 GMT, down from last Thursday's two-month high of $67.30 but supported by lingering doubts over Iran's pledge not to cut off oil supplies in its row with the West.
''The fall in prices is modest ... No one is willing to assume Iran will never use oil as a bargaining chip,'' said Tobin Gorey, commodity analyst at Commonwealth Bank of Australia.
REUTERS SS SP1305