Australia closed at a record high, Jakarta surged seven per cent, Manila hit a seven-month peak and Taipei added 3.3 per cent as markets across the region extended a fast-paced start to 1999.

"The market was pretty strong this morning and there is talk that European funds are buying in the market," said Michael Ng, deputy managing director at Sassoon Securities in Hong Kong.

But, shares in some centres such as Tokyo and Bangkok retreated from early highs on fears of moving too far too fast.

"No surprise the market is slowing down, it was simply profit taking after a significant gain over the past two days," said Thanadech Mahapokai at Book Club Finance and Securities.

"Thai shares have been rising too much and too soon, far above their fundamentals," he added. In late trade Thailand was up 1.77 per cent at 409.70 after soaring six per centon Wednesday.

Tokyo's main index got off to a strong start with an early two per cent rise, taking its cue from a 2.5-per cent jump in the Dow Jones Industrials to a record high of 9,544.97 -- within striking distance of the magic 10,000 mark.

But the key Nikkei average later slipped back to close only 0.51 per cent higher on the day at 13,536.56, dragged down by fears of a rising yen and news that a Brazilian state had suspended debt payments to the central government.

"The Brazil news could have a significant negative impact on New York stocks and on the dollar, which made investors nervous," said Yasuo Ueki, general manager at Nikko Securities.

Elsewhere the mood was upbeat.

Hong Kong's benchmark Hang Seng index roared ahead to end the morning 4.29 per cent higher at 10,673.31 as foreign funds snapped up blue chips, spurred on by hopes of lower interest rates.

The Hong Kong Association of Banks was expected to announce a 25 basis point cut in deposit interest rates after its weekly meeting onFriday, brokers said. Banks cut deposit rates by 25 basis points to 4.25 per cent at the last meeting on December 18.

Singapore's Straits Times Index jumped 4.34 per cent to 1,528.52 by midday, led by property and finance shares on expectations of a rate cut, while Manila's key index shattered resistance to race up 2.65 per cent to a seven-month high of 2,134.91.

"The mood is back again," said Irving Ackerman, presidentat I Ackerman & Co Inc in Manila. "The opportunities are still here...many people are coming back into the market."

Manila also benefited from renewed optimism over the Philippine economy after Standard & Poor's upgraded the country's long-term debt rating outlook to stable from negative.

Foreign investors helped drive Jakarta's composite index up 7.2 per cent to 457.70, while Seoul finished up 4.12 per cent at a 15-month high of 637.59 and Taipei leapt 3.3 per cent to 6,404.31.

"It looks like investors have regained confidence," said Alan Yeh, vice president of President Securitiesin Taiwan.

Retail buying helped Malaysia's composite index rise 1.46 per cent to 595.04 by midday, off a morning high of 599.71.

Australia's All Ordinaries index finished at a record high of 2,897.3, up 1.54 per cent on the day, while New Zealand's key NZSE-40 index finished 1.82 per cent higher at 2,170.66.

"The market has put on 5.1 per cent for this week, 105 points for the last three trading days," said Peter Stokes, a broker at JB Were & Son in New Zealand.