HONG KONG: Asian markets rallied on Thursday and the dollar weakened further after minutes from the Federal Reserve's (Fed) latest policy meeting suggested it could slow the pace of its rate hikes.

The news provided traders with a cushion against concerns about surging coronavirus cases in China that have fanned speculation that authorities would revert to lockdowns and other economically debilitating measures to fight the outbreak.

Wednesday's much-anticipated minutes showed that most US central bank policymakers felt that smaller increases would "likely soon be appropriate" as the economy shows signs of weakness following almost a year of monetary tightening.

Bets were growing on officials announcing a 50-basis-point lift at their December gathering, down from four straight 75-point hikes.

The latest indicators showed that the manufacturing and services sectors continued to contract last month, while jobless claims picked up.

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The developments allowed Wall Street traders to head off to their Thanksgiving break with a spring in their step, the S&P 500 ending at a two-month high as they finally see a glimmer of light at the end of the tunnel after a painful year.

Asia mostly followed suit, with Tokyo, Hong Kong, Mumbai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta all positive, though Shanghai dipped and Wellington barely moved.

Kuala Lumpur surged more than 3 percent and the ringgit held gains after opposition leader Anwar Ibrahim was named prime minister, ending a days-long leadership impasse after inconclusive polls that had rattled Malaysia's markets.

London was flat at the open, while Paris and Frankfurt edged up.

The more risk-on environment was also reflected in a further drop in the dollar against its peers, having surged for much of the year as traders bet on ever-higher US interest rates.

"Equities are reveling in the wake of the... minutes after the Fed telegraphed a downshift from jumbo to extra-large rate hikes," SPI Asset Management's Stephen Innes said. "A commitment to moving toward restrictive monetary policy remains intact, but the [policy board] is ready to slow the path toward that destination."

He added that a less aggressive Fed "should pave the runway for take-off in Asia, fueled by expectations of China's reopening by March next year."

Investors are keeping a close watch on China after it announced a record number of new Covid cases on Thursday as authorities worked to curb the spread with snap lockdowns, mass testing and travel restrictions.

While officials are trying more targeted measures to contain the disease, concerns remain that they would resort to the painful citywide shutdowns seen in Shanghai earlier this year as part of their zero-Covid strategy, which hammered the world's second-largest economy.

However, that worry has been tempered somewhat after China signaled fresh support measures aimed at boosting growth, with its State Council saying tools would be used to ensure liquidity in markets.

The comments led to talk of another cut in the amount of cash that banks must keep in reserve, freeing them to lend more.

Oil prices extended Wednesday's sharp losses fueled by worries about the impact on demand from China's Covid outbreaks.

Innes said a reported Group of Seven consideration for capping Russian crude at $65 to $70 a barrel was higher than expected and not far from the present discount of the contract. That meant the move is not likely to hit exports materially, he added.