Most Asian markets reversed early losses Tuesday as hopes for the economic outlook trumped worries over a coronavirus surge, new lockdowns, a slow vaccine rollout and uncertainty over US Senate elections.

While analysts are broadly upbeat about the long-term outlook this year, the nascent inoculation programmes have yet to have an impact, meaning the first few months will likely be bumpy.

And the task ahead was laid bare by data showing almost 280,000 Americans were infected in one day, while the country's death toll passed 300,000.

And as a new, potentially more transmissible strain rampages around the world, governments are being forced to tighten containment measures again, with England going into a six-week full lockdown after officials warned hospitals could soon face collapse.

Such measures are fuelling concerns the already stuttering economic recovery could be jolted off course in the first quarter, while the rollout of vaccines has been slower than hoped, adding to the market jitters.

"The first quarter will no doubt be tough; the spread has been horrific throughout the festive period and restrictions are being tightened and extended," said Craig Erlam, senior market analyst at OANDA.

"The toll on the economy will be significant but, thanks to the vaccine, consigned mostly to the first quarter."

All three main indexes on Wall Street fell more than one percent, having ended 2020 at or near record highs, with dealers there also keeping tabs on runoff senate elections in Georgia, which will decide the balance of power in the upper house of Congress.

Both Democratic candidates hold narrow leads going into the vote Tuesday, and observers said there are concerns on trading floors that a win for the party would give them control of Capitol Hill and power to pass market-unfriendly measures such as tax hikes and tighter regulation.

Markets have been buoyed in recent months by the prospect of Republicans holding the Senate and providing a check on the Democrats but analysts said a "blue wave" scenario has spooked investors.

"If the Democratic Party... (controls) both houses, we could see an equity market correction, especially if investors worry that such checks and balances around tax and tech regulation will disappear," said Axi strategist Stephen Innes.

However, Gorilla Trades strategist Ken Berman added: "Most analysts agree that a Democratic sweep would pose a risk for stocks, but with all the positive trends in mind, it's unlikely that bulls will have to deal with anything more than an orderly correction."

Asian equities struggled early Tuesday but many managed to bounce back.

Hong Kong was among those that shifted from red to green, helped by news that the New York Stock Exchange had abandoned plans to delist three state-owned Chinese telecom companies.

The move reversed a weekend decision that further dented already strained relations between the world's two superpowers.

Jackson Wong, at Amber Hill Capital, said: "Some funds that had an obligation to unload these shares will now need to buy them back.

"Some investors are also starting to pricing in a scenario that the decision to halt delistings could be a start of a de-escalation in tensions between China and the US.".

The three firms all rallied, having tumbled Monday. China Unicom rose as much as 11 percent at one point, while China Mobileand China Telecom jumped more than eight percent.

Shanghai hit a 13-year high, while the yuan strengthened against the dollar.

There were also gains in Sydney, Seoul, Taipei, Jakarta, Bangkok and Wellington, though Tokyo, Mumbai, Singapore and Manila fell.

Analysts said while there were lingering virus concerns, traders remain upbeat about the future.

"The light at the end of the tunnel is there for all to see and it grows brighter by the week," said Berman.

Oil prices remained under pressure from immediate worries about demand as containment measures go into force, while dealers were also fretting after a meeting of OPEC and other top producers ended without agreement on new output levels for next month.

Bitcoin was sitting at $31,000 after seeing recent wild swings, that saw it hit a record near $35,000 before diving to $28,000 within the space of a day.

London, Paris and Frankfurt all fell at the open.

Tokyo - Nikkei 225: DOWN 0.4 percent at 27,158.63 (close)

Hong Kong - Hang Seng: UP 0.6 percent at 27,649.86 (close)

Shanghai - Composite: UP 0.7 percent at 3,528.68 (close)

London - FTSE 100: DOWN 0.3 percent at 6,550.40

Pound/dollar: UP at $1.3600 from $1.3575 at 2200 GMT

Euro/pound: UP at 90.23 pence from 90.20 pence

Euro/dollar: UP at $1.2265 from $1.2243

Dollar/yen: DOWN at 102.92 yen from 103.14 yen

West Texas Intermediate: UP 0.1 percent at $47.66 per barrel

Brent North Sea crude: DOWN 0.1 percent at $51.05 per barrel

New York - Dow: DOWN 1.3 percent at 30,223.89 (close)

dan/rma

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