By Vikram Subhedar
Higher trading volumes on Thursday suggest the rally is likely to continue near term as credible measures to contain the euro zone crisis sparked short-covering across the board.
The dollar steadied after nursing heavy losses, having suffered its biggest decline in more than two years against a basket of major currencies.
The deal in Europe calls for private banks and insurers to take 50 percent losses on their Greek debt as well as agreements on recapitalisation of hard-hit European banks and a leveraging of the bloc's rescue fund.
Although these measures may not yet be seen as the final solution, they are clearly a step in the right direction and that should help restore some confidence in the market, said Cyril Beuzit, strategist at BNP Paribas.
Euro zone leaders are now under pressure to finalize details of their plan to slash Greece's debt and strengthen the European Financial Stability Fund (EFSF). Focus also shifts to a Group of 20 meeting next week in Cannes, southern France.
"The next week will again be a busy one for investors," said Shane Oliver, Head of Investment Strategy and Chief Economist AMP Capital Investors, in a note.
"Globally the focus will be on the G20 leaders meeting in Cannes on Thursday and Friday for evidence that world leaders back Europe's latest public debt rescue plans," said Oliver.
For the moment, investors cheered progress, however little, and shrugged the lack of details on Greek debt relief.
Risk appetite was further supported by data showing the U.S. economy grew at its fastest pace in a year in the third quarter, a welcome respite for a financial system that seemed on the brink of a recession some weeks ago.
Corporate earnings in the U.S. have also bolstered hopes of a fourth-quarter rally.
According to Thomson Reuters Starmine, about half of the S&P 500 constituents have reported quarterly results with 79 percent beating or meeting analyst expectations.
The MSCI Asia Pacific ex-Japan index <.MIAPJ0000PUS> rose 1.2 percent and is up nearly 10 percent so far this week.
Samsung Electronics <005930.KS> surpassed Apple Inc <AAPL.O> as the world's top smartphone maker with than 40 percent shipment growth and forecast strong fourth-quarter sales, sending its shares up 1.4 percent.
Japan's Nikkei <.N225> was up 1.4 percent despite the yen hitting record highs against the dollar for three days in a row.
The dollar index <.DXY> was up 0.2 percent after falling some 1.6 percent, the biggest one-day fall since May 2009.
The People's Bank of China set the yuan's central parity rate against the U.S. dollar at a record high of 6.3290 on Friday, the highest level since the revaluation in 2005.
In commodities markets, crude oil futures were off 0.7 percent after an over 4 percent rally on Thursday.
Shanghai copper futures opened up 6 percent to its daily limit to 61,010 yuan a tonne but pared some gains to trade around 59260 yuan a tonne late morning.
Spot gold was little changed at $1,742.19 an ounce by 0120 GMT and was poised for its biggest weekly gain since January 2009.