Most Asian markets rebounded on Tuesday from the previous day's sell-off as concerns about the pace of expected Federal Reserve monetary tightening eased, while oil prices pushed to new two-year highs above $75 based on demand optimism.

Regional investors were sent scurrying on Monday as they contemplated the U.S. central bank's latest projections for hiking interest rates.

Ultra-loose monetary policy by the U.S. Fed and other central banks, along with massive government spending, have been key pillars of the rally across global equities enjoyed since their nadir in April last year.

Observers said sharp losses in New York on Friday were largely reversed at the start of this week as traders may have felt they had oversold, with the general consensus still that the world economy is well on the recovery track and accommodative policies will remain in place for the time being.

Read more: Dow, S&P post worst week in months after hawkish Fed spooks investors

Tokyo led gains in early trade, rallying by nearly three percent by lunchtime, having lost more than that on Monday, while Sydney was up more than one percent.

Brent crude prices broke $75 for the first time since April 2019 as investors eye a surge in demand for the commodity as the global economy reopens, with strong rebounds in the United States, Europe and China major catalysts.

"Demand optimism is now well established, and a tightening of the market is very much in the spotlight," Vandana Hari of Vanda Insights said. "If there is a pause in this rally, it will likely come from the supply side."

China stocks climb

Gains in banking and energy stocks pushed China shares higher on Tuesday. Leading the gains, the CSI300 banks index rose 1.4 percent as investors cheered the government's latest reform measures for the sector, while the CSI300 energy index climbed 2.3 percent on oil strength.

From Monday, China has allowed banks to set ceilings on deposit rates by adding basis points to the benchmark rate, a shift from the previous practice of multiplying the benchmark rate, the Self-Disciplinary Mechanism for the Pricing of Market-Oriented Interest Rates said.

(With input from AFP, Reuters)