Tokyo's Nikkei rallied Tuesday as the dollar extended gains against the yen on fresh indications the Federal Reserve will lift interest rates again this year, while technology firms tracked a sector rebound on Wall Street.

However, most other regional markets struggled after Monday's healthy gains, despite being given a positive lead from Wall Street where the Dow and S&P 500 closed at fresh record highs.

One of the key drivers of Monday's US rally were comments from influential New York Federal Reserve Bank President William Dudley, who reaffirmed the bank's plan to press on with its rate hikes and forecast of higher inflation.

He said that despite tepid price rises, he was confident that "if the labour market continues to tighten, wages will gradually pick up".

"Hitting the right chords and sounding dismissive about the recent slowdown in inflation, an unrepentantly hawkish Dudley provided the USD bulls with enough fodder," Stephen Innes, senior trader at OANDA, said in a note.

The remarks came after Fed boss Janet Yellen set out a more hawkish tone than usual, while the central bank set out plans to wind down its asset holdings to suck cash out of the financial system. 

The greenback jumped in US trade and kicked on in Asia, heading towards 112 yen for the first time since the end of May. 

Tokyo stocks ended the morning session 1.1 percent higher, with exporters key winners thanks to the weaker yen, while tech firms bounced after two weeks of sharp losses. 

Other major markets struggled. Hong Kong was slightly lower, Sydney fell 0.4 percent and Seoul gave up 0.1 percent. Singapore shed 0.2 percent. 

Shanghai also slipped 0.2 percent as investors await a decision by MSCI on whether to include it in its list of benchmark indexes.

The bourse has been denied for the previous three years over concerns about certain restrictions, despite Beijing providing greater access to its domestic, renminbi-based capital markets.

MSCI said China still maintains problematic restrictions including a 20 percent monthly repatriation limit, which it called "a significant hurdle for investors," and too many restrictions on new financial product offerings.

 - Key figures around 0230 GMT - 

Tokyo - Nikkei 225: UP 1.1 percent at 20,287.67 (break)

Hong Kong - Hang Seng: FLAT at 25,930.96

Shanghai - Composite: DOWN 0.2 percent at 3,138.97

Dollar/yen: UP at 111.66 yen from 111.54 yen at 2100 GMT

Euro/dollar: UP at $1.1152 from $1.1149

Pound/dollar: DOWN at $1.2732 from $1.2734

Oil - West Texas Intermediate: UP four cents at $44.24 per barrel 

Oil - Brent North Sea: UP seven cents at $46.98

New York - Dow: UP 0.7 percent at 21,528.99 (close)

London - FTSE 100: UP 0.8 percent at 7,523.81 (close)