Asian stocks erased early losses on Monday, while the Australian dollar popped higher as investors heaved a sigh of relief after a batch of Chinese data showed the slowdown in the region's economic powerhouse was not as bad as feared.
China's second-quarter economic growth cooled to 7.5 % versus a year earlier, from 7.7 %, in line with expectations.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 %, having earlier drifted in and out of negative territory. Stock markets from Australia to Hong Kong were all up between 0.3 to 0.9 %.
Japanese financial markets were closed for a public holiday.
"The key reason behind the subdued growth is weak exports, But overall domestic demand has actually held up quite well all the way through Q2," said Louis Kuijs, chief China economist at RBS.
"There are clearly downward risks both from the global side and also the possible impact of lower credit growth, but I think the downward risks have not worsened materially."
Despite the reversal in Asian bourses, the region's stocks underperformed their U.S. peers, which hit record closing highs for a second session on Friday .
Federal Reserve Chairman Ben Bernanke's latest pledge to keep monetary policy loose for some time helped spark the rally in U.S. stocks and forced markets to rein in hawkish expectations.
That has weighed significantly on the U.S. dollar, which fell 1.7 % against a basket of major currencies last week in its second-biggest weekly fall this year.
The dollar index was a touch softer at 82.915 in early trade, having slid to a two-week low of 82.418 last week.
Renewed weakness in the greenback helped the euro jump as high as $1.3208 last week, from lows around $1.2755.
However, the common currency has since given back a bit of ground to $1.3072.
The standout in currency markets was the Australian dollar, which climbed about a quarter of a U.S. cent following the Chinese data, reaching a session high at $0.9110.
It had fallen below 90 U.S. cents on Friday for the first time in three years amid talk that growth in China has slowed even more than forecast. China is Australia's single biggest export market.
Commodity markets also took heart after the Chinese data. Copper rose 0.4 % to $6,982 a tonne, while U.S. crude trimmed losses to be flat on the day around $105.88 a barrel.
Gold traded at $1,292 an ounce, maintaining its momentum after last week's near 5 % rally - its biggest weekly advance in nearly two years.