Most Asian markets were higher Tuesday on the first trading day of the year, continuing their trajectory from the end of a volatile 2016.

Overall, world markets ended last year in the black despite shock votes in Britain and the United States. But Shanghai was the exception with a slump of more than 12 percent and Japan's Nikkei posted only modest gains. 

However Chinese stocks finished solidly higher Tuesday after an independent research firm showed manufacturing activity expanded in December at its quickest pace in nearly four years, a sign of improving health for the world's second-largest economy.

The benchmark Shanghai Composite Index gained 1.04 percent, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, increased 0.86 percent.

Sydney and Seoul both closed up around one percent, while Hong Kong finished slightly up after opening flat. 

Markets in Japan were closed for the final day of an extended New Year holiday. 

The dollar was mixed against most key Asia-Pacific currencies but was projected to continue its climb over the longer term, on expectations of more US interest rate rises this year and Donald Trump's inauguration as US president.

"The US dollar should remain strong in 2017. Growth and inflation in the US will be the strongest amongst the G3 economies (US, Japan and the EU)," Singapore's DBS Bank said in a note.

"We expect the Fed to hike four times this year whilst the eurozone and Japan maintain their quantitative easing  policies," it added.

"Donald Trump will be inaugurated on 20 January as US President. The US dollar should appreciate in anticipation of his plans to reflate the US economy with infrastructure spending, tax cuts and fiscal stimulus."

Malaysian lender Maybank said the dollar's retreat against some other currencies was a technical correction following its strong showing last year.

The "dollar corrected into the new year but dips were noticeably shallow even in the midst of lighter holiday volume," it said in a note.

Oil prices rose as an agreement by major producers to cut output took effect.

OPEC members led by Saudi Arabia and non-OPEC producers like Russia late last year agreed to slash output to try to shore up prices weighed down by an oversupply since mid-2014.

"The outlook for 2017 looks robust as the Brent crude futures chart indicates the price to rise slowly to around US$59 per barrel by the end of 2017," said EY oil and gas analyst Sanjeev Gupta.

- Key figures around 0800 GMT -

Tokyo - Nikkei 225: closed    

Hong Kong - Hang Seng: UP 0.57 percent at 22,126.01 (close)

Shanghai - Composite: UP 1.04 percent at 3,135.92 (close) 

Dollar/yen: UP at 117.83 yen from 117.42 yen 

Oil - West Texas Intermediate: UP 21 cents at $53.96 per barrel 

Oil - Brent North Sea: UP 19 cents at $57.01 per barrel 

New York - Dow: closed

London - FTSE 100: closed

Source: AFP