SYDNEY - Asian shares rallied on Tuesday.

MSCI's broadest index of Asia-Pacific shares outside Japan gains 1.8 percent. 

US crude futures bounced $1.24 to $78.48 a barrel, having hit their lowest this year overnight, while Brent climbed $1.64 to $88.83.

Not all markets seemed convinced the rally would last as Japan's Nikkei slipped 0.5 percent.

EUROSTOXX 50 futures were flat and FTSE futures up 0.1 percent.

S&P 500 futures inched up 0.2 percent and Nasdaq futures 0.4 percent.

Richmond Federal Reserve Bank President Thomas Barkin became the latest official to douse speculation the US central bank would reverse course on interest rates relatively quickly next year.

That heightened tensions ahead of speech by Fed Chair Jerome Powell on Wednesday that is shaping up to be a major messaging event as markets yearn for a pivot on policy.

Analysts suspect they may be disappointed.

"We envision him basically confirming a slower pace of hikes at the December meeting, which is almost entirely priced in," said Jan Nevruzi, an analyst at NatWest Markets. "But we also think he will reiterate that the Fed intends to stay in restrictive territory through next year."

"The softening in the October CPI was welcome news, but hardly a complete victory yet, while growth and labor market data are still strong," he added "It doesn't feel like there is upside for Powell to dial back on the hawkishness."

The Fed is not alone in being hawkish, with European Central Bank President Christine Lagarde warning that euro zone inflation has not peaked and could go even higher

Figures for inflation in Germany and Spain are due later on Tuesday, ahead of the main euro zone report on Wednesday.

The competing comments on policy made for volatile currency trading, with the euro edging up to $1.0377, having hit a five-month peak of $1.0497 overnight before falling back.

The dollar dipped to 138.65 yen, after briefly touching a three-month trough of 137.50 overnight. The dollar index eased 0.3 percent to 106.29, but had been as low as 105.31 the previous session.

The dollar also shed 0.9 percent against the offshore yuan to 7.1830, erasing all the gains made on Monday.

Bitcoin was again choppy after major cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy protection along with eight affiliates. 

In commodity markets, the gyrations in the dollar saw gold rise 0.5 percent to $1,751 an ounce.