U.S. stocks rose, with the S&P 500 adding about 1 per cent.The western countries imposed sanctions, including asset freezes and travel bans, on a small group of officials from Russia and Ukraine after the weekend referendum.
An expression of desire for a swift annexation and retaliation against sanctions placed by the European Union and the United States will rekindle economic fears, driving U.S. government bond yields lower and weighing on the dollar.
Japan's Nikkei stock average rose 1.1 per cent, recovering from a six-week closing low hit on Monday.
For the time being, risk appetite improved as the likelihood of immediate military conflict faded, and market participants turned their attention back to the U.S. economic outlook and the conclusion of the Fed's two-day meeting on Wednesday.The Fed is expected to continue to stick to reducing its monthly asset purchases by an additional $10 billion, and could also alter its forward guidance in its statement.
Fed policymakers could adopt less specific language to describe conditions under which it might tighten policy, instead of the bank's current threshold of a 6.5 per cent unemployment rate for considering a rate rise. The rate now stands at 6.7 per cent, though Fed officials are still signalling that rates need to stay low for some time to support the economy.
The dollar was slightly higher on the day at 101.78 yen, while the euro added about 0.1 per cent to 141.80 yen.
The euro edged up about 0.1 per cent to $1.3932, within sight of a 2-1/2-year high around $1.3967 touched on Thursday.
Gold which hit a six-month high on Monday before plunging more than 1 percent. It was last down about 0.4 per cent at $1,360.21 per ounce, below the previous session's peak of $1,391.76.
U.S. crude edged down 0.1 per cent to $97.97 a barrel, falling for the second day in a row, as expectations of growing petroleum stockpiles in the world's biggest oil user offset any fears that Ukraine tensions could worsen.