Asian stocks hit a five-month high and the dollar fell as a last-minute deal ended the U.S. "fiscal cliff" crisis that threatened a U.S. recession and roiled world financial markets.

The U.S. Congress approved extending lower Bush-era tax rates to all but the nation's wealthiest households in a budget deal that stops automatic implementation of $600 billion in spending cuts and tax increases.

The bill's passage in Congress allayed earlier concerns over complaints from a number of Republicans that spending cuts were still not adequately addressed.

The temporary reprieve that the deal offers the U.S. economy also sets up Wall Street for a strong start to trading which resumes later in the day.

Asian stock markets cheered the developments as a major risk for investors, namely a slump in global growth, appeared to have receded for now.

The MSCI Asia Pacific ex-Japan index of stocks <.MIAPJ0000PUS> jumped 1.8 percent. Chinese shares in Hong Kong jumped 3 percent as last month's rally spilled over into the new year.

"If the fog caused by the fiscal cliff disappears, there will probably be moves toward putting risk back on," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

In South Korea, where data showed manufacturing activity rose for the first time in seven months in December, the KOSPI index <.KS11> was up 1.6 percent while Australian shares rose to their highest level in 19 months.

Asian stocks outside Japan rose nearly 20 percent last year as a combination of improving economic data from China, easing worries about a euro zone blow-up, and global central bank easing that encouraged investors back into equity markets.

Sakthi Siva, Asia strategist for Credit Suisse, said in a note to clients that 2013 could see similar returns for Asian equities, given a solution to the fiscal crisis.

"As we move into 2013 we retain our bullish bias, and our theme is whether markets could catch up with earnings," said Siva, adding that markets in China and India could offer the most upside given the mismatch between index levels and earnings expectations.

OIL, EURO UP

Risky assets across the board got a lift with crude oil futures up 0.9 percent and copper futures in London jumping 1.7 percent.

The euro rose to $1.3261 against the U.S. dollar.

The safe-haven U.S. dollar edged lower, falling 0.4 percent against a basket of major currencies .

The Australian dollar, a currency that tends to benefit when optimism about the outlook for the global economy increases, rose to $1.0470.

The Japanese yen continued its slide as investors wagered the Bank of Japan would have to take ever-more aggressive easing steps to support the economy and satisfy the new government.

The yen fell to 87.17 against the dollar to its weakest level since July 2010.

The Japanese currency also dropped to depths not seen in more than four years against the Australian and New Zealand dollars.

(Additional reporting by Wayne Cole in SYDNEY and Masayuki Kitano in SINGAPORE; Editing by Eric Meijer)