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Hong Kong shares ended 0.61 percent higher on Monday after Cyprus agreed a last-minute deal with its international creditors that will qualify it for a crucial bailout.
The benchmark Hang Seng Index added 135.85 points to 22,251.15 on turnover of HK$60.68 billion ($7.83 billion).
The European Union, European Central Bank, International Monetary Fund and eurozone leaders hatched a deal after 12-hour talks with Cypriot President Nicos Anastasiades.
The agreement involves breaking up the island's second largest lender Laiki (Popular Bank), while deposits above 100,000 euros ($130,000) in Bank of Cyprus, the island's main lender, will take a major "haircut".
"It does appear that the near-term risks have been addressed by the European authorities," said Matthew Sherwood, head of investment market research at Perpetual in Sydney.
"There was always the hope and expectation, even the knowledge, that Cyprus would have to swallow its medicine and do what the troika told them to do," he told Dow Jones Newswires.
Leaders had been under pressure to reach a deal after the ECB warned it would cut off funding to the island's banks if nothing had been done by Monday, which would have led to their collapse and likely forced Cyprus out of the eurozone.
Buying sentiment was also lifted by upbeat earnings reports.
China Construction Bank rose 2.3 percent to HK$6.31, refiner Sinopec rose 2.7 percent to HK$8.99 and coal miner Shenhua Energy climbed 1.4 percent to HK$28.75, while Greentown China jumped 10.5 percent to HK$13.50 -- all of which recorded improvements in net profit for last year.
Chinese shares ended flat. The benchmark Shanghai Composite Index fell 0.07 percent, or 1.56 points, to 2,326.72 on turnover of 85.4 billion yuan ($13.8 billion).
"The Cyprus negotiations played a big role in influencing markets last week, but the focus will shift to domestic factors," Zheshang Securities analyst Zhang Yanbing told Dow Jones Newswires.
Mainland investors remain on edge about the world's second biggest economy, despite upbeat manufacturing figures last week.
Brokerages led the declines, with Industrial Securities dropping 3.09 percent to 12.23 yuan and China Merchants Securities down 2.36 percent at 13.65 yuan.
Steel companies rose after media on Monday quoted an industry association official as saying the business environment would improve this year. Chongqing Iron & Steel jumped 6.95 percent to 3.23 yuan.
Bank of Communications rose 0.82 percent to 4.90 yuan.