Ammon News - (Reuters) - Asian stocks rose to six-week highs on Tuesday, led by a rally in Chinese shares, while gold took a breather after its biggest one-day gain in more than a year.

European stocks were seen opening higher, tracking gains in Asia. Investors were also keeping an eye on earnings reports from the likes of U.S. tech giant Apple (AAPL.O).

Among the best performers in Asia, Hong Kong's Hang Seng .HSI advanced 2.0 percent and the CSI300 .CSI300 of the leading Shanghai and Shenzhen A-share listings jumped 2.5 percent.

The strong gains in Chinese markets helped drive MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 1.3 percent to their highest since early June, with Tokyo's Nikkei .N225 closing up 0.8 percent.

Sentiment in China was boosted by separate media reports that the government would use railway projects to help cut gluts in steel, cement and other construction materials, and that Beijing would not permit economic growth to sink below 7 percent.

Concerns about a rapid slowdown in China's economy and plans by the U.S. Federal Reserve to start trimming its massive bond-buying program later this year have seen global equities falter in recent weeks.

Japanese stocks rose for a second day following Prime Minister Shinzo Abe's weekend victory in upper-house elections.

The win has strengthened Abe's mandate to push through painful economic reforms to end decades of stagnation, although he will still have to overcome opposition in his party.

"People, especially long-onlys, are not overweight in Japan. As long as the markets are stable - the U.S. market is looking good, China is not falling off the cliff - there will be opportunistic buying here and there," a senior dealer at a foreign brokerage in Tokyo said.

Bullion attracted good interest as it continued to recover from a 23 percent in the second quarter.

Spot gold stood at $1,330 an ounce, having jumped about 3 percent on Monday in its best performance since June 2012. The rally has pushed bullion further away from a 34-month trough of $1,180.71 plumbed just a month ago.

"People are more confident that the downside risk has subsided just a little bit," a Hong Kong-based precious metals trader said.

Traders said a theme across markets involved investors taking profits and unwinding bearish positions in a number of assets that had fallen sharply in the past few months.

Consistent with that, there has been a rebound in the yen and even the Australian dollar, which in turn pushed the U.S. dollar broadly lower.

The dollar index .DXY, which tracks the greenback's performance against a basket of major currencies, wallowed at one-month lows following a 0.5 percent fall on Monday.

The euro was little changed on the day at $1.3191, having topped out at a one-month high around $1.3218 overnight. Against the yen, the dollar was pinned below 100, down from Monday's high of 101.05.

The Australian dollar rose 0.1 percent to $0.9256, pulling further away from a three-year low of $0.8998 set earlier in the month.

Commodity prices were softer with copper slipping back below $7,000 a tonne, reversing some of Monday's 1.7 percent rally. U.S. crude traded around $107 a barrel, as investors booked profits after it had hit a 16-month high of $109.32 on Friday.