TOKYO: Asian shares gained across the board on Thursday and the dollar was on the defensive after suffering substantial losses as risk appetite revived after the US Federal Reserve reduced the number of interest rate hikes expected this year.

The potential for more money to continue flowing into commodities and equities, rather being lured by higher US interest rates, boosted crude oil and emerging market stocks.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed to a two-month high and was last up 2.1 percent.

Japan's Nikkei brushed aside a stronger yen and advanced 1.4 percent. Australian stocks added 0.8 percent, South Korea's Kospi rose 1.2 percent and Shanghai was up 0.6 percent.

Asian equities took their cue from Wall Street, where the S&P 500 closed at its highest level this year following the US central bank's cautious message.

The Fed concluded a closely watched two-day policy meeting on Wednesday by leaving interest rates untouched, as expected, and signalling fewer rate hikes in coming months as the United States continues to face risks from an uncertain global economy.

"Removing interest rate risk from the near horizon has been enough to coax money back into risky assets, but price increases in gold and the depreciation of the dollar would indicate that quantification of the degree of risk still varies greatly," said Martin King, co-managing director at Tyton Capital Advisors.

Global growth concerns, particularly regarding China, have rattled markets through much of the this year, and this was seen to have influenced the Fed's position.

"In our view, the Fed has become increasingly responsive to changes in financial conditions. We believe this sensitivity is a problem since we see the Fed's intended policy actions as contributing to the very financial conditions that led to its eventual inaction," strategists are Barclays wrote.

The dollar index hovered near a one-month low of 95.539 hit overnight after the Fed reduced its expectations for interest rate hikes in 2016 to two from four.

The euro was near $1.1244, its highest since March 15. The dollar traded at 112.735 yen following a dip to a one-week trough of 112.335.

Commodity-linked currencies rose strongly as products such as oil and iron ore soared after the Fed's decision.

The Australian dollar, which already jumped 1.2 percent overnight, caught a fresh lift from an upbeat local jobs report and rose to an eight-month high of $0.7620.

The Canadian dollar was firm at C$1.3100 to the dollar after rallying nearly 2 percent to a four-month peak of C$1.3094 overnight.

Emerging market currencies such as the Malaysian ringgit and Indonesian rupiah also firmed. The South Korean won was at its strongest against the dollar since the end of December.

Oil prices also rose as major producers firmed up plans to meet in Qatar to discuss an output freeze. U.S. crude oil rose to a three-month peak of $39.38 a barrel after surging nearly 6 percent overnight.

Three-month copper on the London Metal Exchange traded up 1.5 percent at $5,000 a tonne. A weaker greenback tends to favour commodities traded in dollars by making them cheaper for non-US buyers.

Spot gold slid 0.2 percent to $1,259.61 an ounce as the precious metal lost steam following Wednesday's 2.5 percent surge.

Spot iron rose 1.5 percent to $52.50 a tonne late on Wednesday, helping the metal reverse some the steep losses suffered over the past week.