Investors have taken heart from reassurances by authorities around the world that the fallout from the collapse of US regional banks and the takeover of Credit Suisse was contained.
But the flare-up has also fanned speculation the Federal Reserve will have to end its inflation-fighting rate hike campaign sooner than expected in order to avoid further destabilising the finance industry.
That has even led to bets on officials cutting borrowing costs by the end of the year -- some forecasts put the rate at just above four percent by 2024, compared with more than five prior to the recent upheaval.
That has focused eyes on the Fed's next policy meeting, with observers predicting that could mark the last increase, even though inflation is still much higher than its target.
"The Fed remains in a very difficult position," said Wolfe Research's Chris Senyek.
"With banks stabilising, inflation still way above target, the labour market still historically strong, and the Fed desperately needing to rebuild credibility, our sense is that the (policy board) will hike by 25 basis points on May 3."
There is a feeling the latest woes among banks, which have been blamed on recent sharp hikes in rates, will force them to tighten credit, reducing the need for the Fed to hike further.
SPI Asset Management's Stephen Innes said: "The good news for stocks is that growth concerns have moved into the driver's seat after the recent banking shock, where investors are now positioning for the Fed to cut and instead rely on credit tightening to tame inflation.
"Indeed, speculative money is now betting... (that) the disinflationary impulse from tighter credit will reduce the need for monetary policymakers to slow the economy through rate hikes, which could potentially even cause the Fed to cut."
All three main indexes on Wall Street rose at least one percent, but Asia struggled to build on that.
Hong Kong dipped, even though Alibaba extended its gains after surging 12 percent Wednesday on news it intends to split into six units.
On Thursday, it said it would consider giving up control of some of its main businesses. The announcement this week lifted China's tech sector on hopes a long-running crackdown was nearing its endgame.
Tokyo, Shanghai, Singapore, Manila and Jakarta were also lower but Sydney, Seoul, Taipei and Wellington rose.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.7 percent at 27,681.32 (break)
Hong Kong - Hang Seng Index: DOWN 0.3 percent at 20,139.70
Shanghai - Composite: DOWN 0.3 percent at 3,231.43
Dollar/yen: DOWN at 132.59 yen from 132.85 yen on Wednesday
Euro/dollar: DOWN at $1.0835 from $1.0845
Pound/dollar: DOWN at $1.2310 from $1.2316
Euro/pound: UP at 88.02 pence from 88.01 pence
West Texas Intermediate: DOWN 0.2 percent at $72.80 per barrel
Brent North Sea crude: DOWN 0.3 percent at $77.37 per barrel
New York - Dow: UP 1.0 percent at 32,717.60 (close)
London - FTSE 100: UP 1.1 percent at 7,564.27 (close)
dan/qan
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