Foreign ministers from Russia, Ukraine, Germany, and France gathered in Berlin over the weekend to discuss talks for a ceasefire or a political solution, and Russia's Foreign Ministry said on Monday that a "certain progress" was achieved during the talks.
Still, investors continued to cautiously monitor developments. Military spokesmen said dozens of people, including women and children, were killed as they fled fighting on Monday when their convoy of buses leaving the rebel-held city of Luhansk was hit by rocket fire.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6 percent to its highest level since late July, while Japan's Nikkei stock average rose 0.9 percent to a two-week high.
"Confidence is back as we've got strong United States shares and upbeat data from the United States," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
United States stocks marked solid gains on Monday after upbeat housing data, and as the Ukraine situation showed signs of stabilisation. The Nasdaq Composite topped the key 4,500 mark for the first time since March 2000.
United States homebuilder sentiment rose in August to its highest since January, the National Association of Home Builders said on Monday, marking a third straight monthly gain and beating the mean estimate of analysts polled by Reuters.
The better-than-expected figure helped United States Treasury yields pull away from recent lows, with the yield on the benchmark 10-year United States Treasury note at 2.396 percent in Asia, compared with its United States close of 2.387 percent on Monday.
It had dropped as low as 2.30 percent on Friday, its lowest since June 2013.
Later in the week, investors will be keeping a close eye on Wednesday's release of minutes from the Federal Reserve's July policy meeting as well as comments from the Fed's summit in Jackson Hole, Wyoming, which starts on Thursday.
"Some Fed officials have been talking about the need for an earlier rate hike so investors will also be looking to see if there is a more hawkish bias to the FOMC minutes," said Kathy Lien, managing director at BK Asset Management.
Janet Yellen is slated to speak on Friday, her first Jackson Hole appearance at the helm of the United States central bank.
The dollar bought 102.62 yen, up about 0.1 percent, while the euro edged down about 0.1 percent to $1.3356, not far from this month's nine-month low of $1.3333. Against the safe-haven yen, the euro rose slightly to 137.05.
The dollar index, which tracks the United States unit against a basket of rivals, added about 0.1 percent to 81.617, and moved back toward an 11-month high of 81.716 hit earlier this month.
In commodities trading, spot gold steadied on the day at $1,299.10 an ounce but remained below the $1,300 level against the backdrop of improved risk sentiment.
United States crude added about 0.4 percent to $96.78 ahead of the September contract's expiration on Wednesday. Brent crude edged up about 0.2 percent to $101.82 after shedding nearly $2 a barrel overnight to its lowest price in over a year.