Asian shares on Monday tracked gains in U.S. markets, after Deutsche Bank seemed to catch a break from the U.S. Department of Justice.

Australia's S&P/ASX 200 was nearly 0.9% higher, with Japan's Nikkei Stock Average up 1.2%. In Hong Kong, the Hang Seng Index traded higher by 1.5%. The Korean and Malaysian markets were shut for holidays Monday, while Chinese markets were shut for the weeklong National Day holiday.

Deutsche Bank's shares listed on the New York Stock Exchange rose 14% on Friday, after Agence France-Presse said in a report that the bank and the U.S. Justice Department were close to a $5.4 billion settlement. The Wall Street Journal had previously reported that the Justice Department was seeking a $14 billion settlement from Deutsche, with the bank saying it wouldn't pay "anywhere near" that amount.

The report Friday brought relief to investors, who had feared that a $14 billion fine would threaten the institution's capital position.

"The market questioned its [Deutsche Bank's] ability to pay the potential fines of $14 billion, in turn triggering a confidence crisis among banks," said Hannah Li, a stock strategist at broker UOB Kay Hian in Hong Kong.

Investors were concerned that Deutsche Bank's troubles would spread, hitting confidence in global banks—a worry given the ample vulnerabilities among banks around the world. Banks are facing troubles in Italy, nonperforming loans are on the rise in China and India, while Japanese banks are staring at minimal income in a negative interest-rate environment.

But on Monday at least, those anxieties eased.

In Australia, Macquarie Group rose 0.8% with the S&P/ASX subindex tracking the top 200 financial stocks rising 1.3%, the highest among its indexes tracking individual sectors.

Shares of commodity companies strengthened, with BHP Billiton trading 1.8% higher and Rio Tinto rising 0.7%.

Commodity prices rose following initial weakness in the U.S. dollar stemming from doubts about whether the U.S. Federal Reserve would be able to raise interest rates this year.

The WSJ Dollar Index, which measures the U.S. currency against 16 others, recouped its 0.1% decline Friday in early Asian trade. It was relatively stable against major Asian currencies and unchanged against the Japanese yen.

Japanese banking stocks strengthened, with Nomura rising 3%, T&D Holdings gaining 0.8% and Mizuho Financial trading 1.1% higher. Resona Holdings was up nearly 1.5%.

The Bank of Japan's tankan survey released Monday morning confirmed that the yen's appreciation has hurt companies' profitability.

The survey, made public Monday, showed Japan's large manufacturers now expect their pretax profit to drop 14.6% in this financial year through March, compared with a previous forecast for a 11.6% fall.

However, some traders said Deutsche Bank's problems weren't over yet.

"This is just a temporary relief rally," said Alex Wijaya, a senior sales trader at CMC Markets, adding that investors will be focusing on how problems in the banking sector pan out.

"Deutsche Bank is not out of the woods yet," he said, referring to an Italian judge's decision to charge 13 former and current executives at Banca Monte dei Paschi di Siena, Deutsche Bank and Nomura International with a number of alleged financial crimes.

Megumi Fujikawa contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

October 02, 2016 23:55 ET (03:55 GMT)