After a shaky start to the year, China's economy has recently shown signs of steadying as a series of government stimulus measures kick in, but many economists believe more policy support may still be needed to sustain a recovery.
Second-quarter GDP data will be released on Wednesday. Japan's Nikkei average rose 0.7 percent while South Korea's Kospi gained 0.8 percent. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.
U.S. stocks ended higher on Monday, with the Dow Jones industrial average hitting an intraday record, helped by Citigroup's better-than-expected earnings and more deals in the healthcare sector.
Investors also put aside concerns about euro zone banks for now, as Portugal's biggest bank reassured investors of its stability, despite recent difficulties.
Portuguese 10-year bond yields fell to 3.83 percent, retreating further from a six-week high above 4 percent hit last week after disclosures of financial problems at a web of family-held holding companies behind Banco Espirito Santo.
Gold licked its wounds after the biggest fall in 7 1/2 months on Monday as fading fears over Portugal's banking sector and a gain in U.S. equities prompted investors to take profits after bullion's rally to 3-1/2 month highs last week.
Gold traded at $1,306.80 per once, having fallen to as low as $1,302.90 on Monday.
As risk appetite returned, the 10-year U.S. Treasury yield rose back to 2.541 percent from low of five-week low of 2.494 percent hit last week.
U.S. bond yields have been kept low as the Fed has signalled it plans to keep interest rates around zero even after it finishes tapering its stimulus programme.
Yellen's testimony gives bond traders a chance to try to find clues on when and how the Fed plans to raise interest rates, after the minutes of the Fed's last meeting showed policymakers discussed exit strategies from its current loose policy.
A shift in the U.S. rate outlook could have a big impact on asset prices.
"While Yellen dismissed the recent rise in inflation as "noise", our economists believe that inflationary pressures are building in a sustainable fashion and investors may be forced to start pricing in a more aggressive pace of hikes later this year," Sreekala Kochugovindan, an analyst at Barclays wrote in a report.
Major currencies hardly budged ahead of Yellen's comments. The euro stood at $1.3620 and the yen changed hands at 101.55 to the dollar, both stuck in their recent ranges.
The Bank of Japan will conclude its policy meeting on Tuesday, but no policy change is expected.
Elsewhere, U.S. crude futures hit a nine-week low of $100.22 per barrel on Monday on signs of improving supply from key producers but renewed violence in Libya helped them rebound to around $101.- Reuters
Limited time offer:
Just RM5 per month.
