SYDNEY, NSW, Australia - Stocks in Asia were mostly stronger on Tuesday after the heightened volatility of the previous day.

Markets, however, in New Zealand unexpectedly nose-dived.

The cautious optimism elsewhere was triggered by a rebound in the British pound, which tumbled on Monday in response to last week's initiatives by the UK government to cut taxes and provide other incentives to spur on the economy.

"It is definitely something that's unfolding...probably we're only at a certain initial stage of seeing how the market digests that kind of information," Yuting Shao, macro strategist at State Street Global Markets told Reuters Monday.

"Of course, the tax cut plan itself was really aimed to stimulate growth, reduce household burdens, but it does raise the question of what the implications are in terms of the monetary policies."

In Japan, the Nikkei 225 jumped 140.32 points or 0.53 percent to 26,571.87.

The Australian All Ordinaries added 29.00 points or 0.43 percent to 6,696.50.

South Korea's Kospi Composite rose 2.92 points or 0.13 percent to 2,223.86.

China's Shanghai Composite surged 42.64 points, or 1.40 percent, to 3,093.86.

In Hong Kong, the Hang Seng gained 5.17 points or 0.03 percent to 17,860.31.

Now for the bad news. In New Zealand, the S&P/NZX 50 plummeted 220.33 points or 1.93 percent to 11,214.49.

The British pound surged to 1.0809 by the Sydney close on Tuesday, well ahead of the 103.27 low touched on Monday. The euro bounced up to 0.9661. The Japanese yen inched up to 144.24. The Swiss franc firmed to 0.9885.

The Canadian dollar strengthened to 1.3653. The New Zealand dollar rose to 0.5710. The Australian dollar was only a fraction higher at 0.6496.

Overnight on Wall Street, the Dow Jones industrial averages lost 329.60 points or 1.11 percent to 29,260.81.

The Nasdaq Composite lost 65.00 points or 0.60 percent to 10,802.92.

The Standard and Poor's 500 fell 38.19 points, or 1.03 percent, to 3,655.04.