By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Most Asian markets rose early Tuesday after a strong finish on Wall Street, with Australian shares climbing to their best level in years and Hong Kong rallying as well, though Japanese blue-chips declined as the yen strengthened.

In Sydney, the S&P/ASX 200 took out the 52-week high with a gain of 0.8%, drawing support from better-than-expected results from Australia & New Zealand Banking Group Ltd.

Likewise, Hong Kong's Hang Seng Index rallied 1% and South Korea's Kospi added 1.1%, after the S&P 500 (SPX) finished at a record level on Monday.

"In an environment where sentiment remains positive, but with an undercurrent of caution, [and] earnings growth is modest ... investors are likely to continue their focus on capital management and reward companies that return capital to investors," Perpetual head of investment market research Matt Sherwood.

Stock performance in Tokyo was mixed as investors returned from Monday's holiday, with front-line companies staging a retreat as the U.S. dollar traded around the 98-yen level, a little less than a yen lower when the Japanese share market last traded Friday.

The Nikkei Stock Average , a benchmark of 225 top stocks including many key exporters, fell 0.4%, even as the broader Topix Index of all Tokyo-traded large-capitalization issues gained 0.3%.

Shares of Canon Inc. (CAJ) dropped 1.4%, and Komatsu Ltd. (KMTUF) declined 1.3%, while Honda Motor Co. (HMC) slid 3.6% after the company's earnings forecasts for the current fiscal year fell short of estimates.

The Nikkei Average's drop in Tokyo came after official data released earlier in the day showed industrial production rose a less-than-expected 0.2% in March, half of what analysts had anticipated.

Retail shares broadly advanced after March sales at large-scale retailers climbed 2.4% in March from the year-ago period.

Shares of convenience-store chain Seven & I Holdings Co. (SVNDY) gained 1.2%, while rival FamilyMart Co. (FYRTY) rose 1.7%.

In Sydney, Australia & New Zealand Banking Group (ANZBY) jumped 4.2% after posting a 10% gain in cash profit that beat expectations.

The result helped lift other financials as well, with National Australia Bank Ltd. (NABZY) climbing 1.8%, and Commonwealth Bank of Australia (CBAUY) rising 1.4%.

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