Asian shares mostly rose Tuesday following a strong lead from Wall Street, while Sydney was lifted by better-than-expected inflation and Japan raised its growth outlook for fiscal 2010.

However, Shanghai continued to be strained by expectations of policy tightening moves by China to cool its economy and rein in prices.

Tokyo was 1.21 percent higher in afternoon trade, Hong Kong gained 0.48 percent by the break and Sydney added 0.50 percent while Seoul jumped 1.03 percent.

The Bank of Japan said Tuesday it expected Asia’s second biggest economy to grow 3.3 percent in the year to March, up from previous forecasts for 2.1 percent growth.

The news gave a further boost to Tokyo’s Nikkei, where exporters were already leading gains on the back of a weakening yen.

Earlier Tuesday the Reserve Bank of Australia said the fourth-quarter consumer price index rose 0.4 per cent from the previous three months and was up 2.7 percent over the year.

Economists had expected a 0.7 percent quarter-on-quarter increase and a three percent rise over the 12 months.

“The RBA can sit tight for quite some time,” BNP Paribas economist Dominic Bryant told Dow Jones Newswires.

He added that the bank is unlikely to hike rates this year. “There’s a lack of underlying price pressures present.”

Regional shares were given a lift by a 0.92 percent gain on the Dow in New York, brought about by hopes of strong corporate earnings and as dealers awaited the outcome of a Federal Reserve policy meeting this week.

But Shanghai was 0.56 percent off amid ongoing fears of a rate hike on the mainland after data last week showed inflation last year was above the government’s target.

“We expect the government to raise interest rates in February as January’s consumer price index may be higher than November’s, which was at a 28-month high of 5.1 percent,” said Lu Zhengwei, an economist from Industrial Bank.

On forex markets, the euro hovered at two-month highs as sovereign debt worries eased.

The euro rose to $1.3682 in Tokyo morning trade from $1.3635 in New York late Monday, when the unit had earlier hit a two-month high of $1.3686.

The dollar slipped to 82.35 yen from 82.48 while the euro was at 112.67 yen from 112.53 yen Monday.

The single currency also given support by comments from European Central Bank chief Jean-Claude Trichet warning against inflation pressures in the eurozone, spurring speculation of an interest rate increase.

“Trichet’s remarks raised speculation that (the) ECB may raise interest rates,” said Akihiro Tanaka, dealer at Resona Bank. “The euro is holding firm as investor appetite remains unabated even after it climbed to the two-month high.”