By Wayne Cole

SYDNEY (Reuters) – Asian share markets followed Wall Street higher on Wednesday as revived risk sentiment dented the U.S. dollar and sovereign bonds, though it was far from clear how long the sudden mood swing would last.

Much might depend on whether oil can sustain its recent rally, thus helping to underpin energy stocks and lessen fears of global deflation.

So far on Wednesday, oil prices were down only modestly with bulls seemingly hopeful that industry cuts to investment would lessen the glut of supply in the market.

Benchmark Brent crude oil (LCOc1) was off 51 cents at $ 57.40, but that followed a rise of almost 6 percent on Tuesday. U.S. crude (CLc1) was quoted 96 cents lower at $ 52.09, but again that compares with a low last week of $ 43.58.

In share markets, the Nikkei (.N225) sprang ahead by 2.1 percent while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2 percent.

Australia’s main share index (.AXJO) climbed 1 percent to a near seven-year peak as bulls basked in the glow of Tuesday’s cut in domestic interest rates.

Shares in Shanghai (.SSEC) firmed 0.4 percent amid speculation that China’s central bank would be the next to ease policy following moves in Australia and Singapore.

A survey suggesting China’s services sector grew at the slowest pace in six months in January only added to the expectations of more stimulus.

One newspaper reported 14 Chinese provinces planned to invest 15 trillion yuan ($ 2.4 trillion) in infrastructure and other projects to help revive growth.

Earlier on Wall Street, the Dow (.DJI) had ended Tuesday 1.76 percent higher, while the S&P 500 (.SPX) gained 1.44 percent and the Nasdaq (.IXIC) 1.09 percent.

Greek markets had led the way in Europe on hopes that progress was being made in to progress in the stand-off over the country’s debt mountain. [TOP/CEN]

Still, it was far from certain whether Greece’s proposed debt-swap plan would get anywhere with euro zone officials giving it a chilly reception.

The improvement in risk sentiment was enough to trigger a selloff in Treasuries, where yields on 10-year paper hit 1.816 percent after the biggest daily rise in 14 months.

Market positioning exaggerated the moves as investors have been very short on oil and very long on dollars and bonds.

The U.S. dollar regained just a little ground on Wednesday, with its index edging up 0.24 percent to 93.824 (.DXY). On Tuesday it had suffered its biggest one-day fall since Oct 2013.

The euro was hovering at $ 1.1455 (EUR=), after an eye watering reversal from Tuesday’s low of $ 1.1312. The dollar fared better on the safe-haven yen, rising to 117.91 (JPY=).

(Editing by Shri Navaratnam and Eric Meijer)