SINGAPORE: Asia stocks nudged higher on Tuesday as the dramatic U-turn in British fiscal policy brightened investor sentiment, while the U.S. dollar took a breather at its lowest levels in more than a week as a revival in risk-taking lowered its appeal.

Britain's new finance minister Jeremy Hunt abandoned most of Prime Minister Liz Truss' economic plan that had led to a political maelstrom fuelled by market turmoil, with the pound hitting record lows in recent weeks and the Bank of England being forced to intervene.

Morgan Stanley analysts said the fiscal U-turn was likely to have significant implications for the BoE as its economists now revise their call for the November meeting to a 75-basis-point rate hike, from 100 basis points.

Hunt's move led to Britain's government bonds, currency and shares soaring, also lifting Wall Street.

Given such a wholesale scrapping of PM Truss' Tory leadership promises, it remains an open question how long Truss will remain in power, said Tapas Strickland, head of market economics at National Australia Bank.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.43%, while Japan's Nikkei was up 0.6%. S&P 500 futures and Nasdaq futures were both up 0.8%.

China's stock market opened nearly flat and edged up 0.12% to 3,088.54 as the Chinese ruling Communist Party's twice-a-decade congress remains in session this week.

Chinese state banks are stepping up intervention to defend the weakening yuan, banking sources told Reuters on Monday, while many companies have announced share buyback programmes.

In currency markets, the U.S. dollar retreated against most currencies overnight, with sterling subdued early on Tuesday after gaining 1.6% in the previous session.

The Australian dollar rose on Tuesday after the Reserve Bank of Australia said it expects to raise interest rates further over the coming months.

The yen touched a fresh 32-year low of 149.10 per dollar on Monday, not far off the psychological metric of 150. Investors have been watching out for any signs of further intervention by the Bank of Japan, with authorities repeatedly warning of a firm response to overly rapid yen declines.

NAB's Strickland said many are noting 150 as a key threshold that the government will be keen to avoid a sustained break of, for political reasons.

Meanwhile, China has delayed the release of economic indicators, including the country's third-quarter gross domestic product due on Tuesday and trade data that had been scheduled last Friday.

Brent was up 0.08% to $91.69 a barrel, while U.S. crude rose 0.04% to $85.49 per barrel.

(Editing by Jacqueline Wong)