Hong Kong: Asian stocks held ground on Tuesday though Chinese equities surged to a fresh 2-1/2 month high as domestic funds piled into financial counters on expectations the world's second biggest economy may have turned a corner.

With US markets closed for the Presidents Holiday on Monday, Asian markets have had few global cues off which to trade. European markets are broadly expected to follow in Asia 's wake and seen drifting in a narrow band. Chinese stocks led regional gainers with mainland indexes extending a nearly 7 percent rise over the last month thanks to an influx of fresh funds from domestic institutional investors and a brightening outlook for the domestic economy.

China's blue-chip index .CSI300 clocked its best day in six months on Monday on reports pension funds will begin pumping in funds into the country's stock markets. Meanwhile, turnover in Hong Kong shares has jumped noticeably in recent weeks.

Despite the bounce in mainland stocks , valuations remained broadly middle of the pack in Asia with price-to-earnings multiples for Chinese stocks at 19.7, far below Australia's and India's at 25 and 23, respectively.