Traders have been on edge since Saturday's barrage by Iran, which Israel's army chief General Herzi Halevi warned would be met with a response.

Oil edged up after the previous day's losses, which were fuelled by data indicating softer demand in the United States and fading fears of a regional war in the Middle East.

The foreign exchange market has witnessed a surge in volatility following Iran's weekend drone and missile assault on Israel, in retaliation for what Tehran said was an Israeli strike on its embassy in Syria.

Traders were also digesting figures showing Chinese expansion easily beat expectations in the first three months of the year but retail and industrial data came in well below par, suggesting leaders have much work to do to kickstart growth.

The consumer price index "is the critical number this week", said NatAlliance Securities' Andrew Brenner.

With consumer prices picking up in January and February, the jobs market still strong and the economy in rude health, traders have regularly tweaked their forecasts for monetary policy easing this year, and some are even contemplating no cuts before 2025.

The threat of regional war compounded fears that the Federal Reserve would not cut interest rates as much as previously expected, with focus now on the release of key US jobs data later in the day.

Traders were also cheered by a big jump in Chinese factory activity that fuelled hopes the world's number two economy may be on its way back after bottoming out.

Confidence has not been helped by comments from Fed officials in the past week.

Markets were mixed in Asia on Wednesday following a negative day on Wall Street as observers warn the latest equities rally may have run out of steam, with investors looking for fresh catalysts to kickstart buying.

The projections sparked a rally on markets and calmed traders spooked by the previous week's data showing consumer and wholesale prices rose more than estimated in February.

After last week's Federal Reserve projections for interest rates indicated it would cut three times this year, traders are optimistic about the outlook for equities.

News that the central banks of Switzerland and Mexico had started cutting added to the sense that decision-makers were gearing up to reverse their tightening measures.

Fed decision-makers are widely expected to hold interest rates at a two-decade high, but traders will also be watching the "dot plot" of projections for how many cuts they see this year.

Traders are pricing in three reductions before the end of 2024, and a similar forecast by the Fed could line up the first in June, Bloomberg News said.

The broadly upbeat performance came despite a tepid showing on Wall Street, and with analysts warning the recent rally across equities could stall as investors lock in profits and assess the outlook for monetary policy.

The European Central Bank added to the upbeat mood in trading floors, with its president Christine Lagarde suggesting reductions could start in June.

Investors are turning to profit-taking as last week's mega market rally -- fuelled by stellar results from US technology titan Nvidia -- loses steam, analysts say.

US Federal Reserve officials expect interest rates will need to remain high "for some time" to tackle stubborn inflation, according to minutes of the most recent rate decision published on Wednesday.

With traders taking a breather, many markets were mixed in Asia on Friday.