HONG KONG — Most Asian equity markets rose with the yen on Monday after US Federal Reserve boss Jerome Powell said "the time has come" to start cutting interest rates, lining up the central bank for a move as soon as next month.

The comments provided investors with an extra boost and helped put the August market turmoil behind them, though analysts warned to be on guard for any unexpected data that could burst the optimistic bubble.

Traders were also keeping an eye on developments in the Middle East after a flare-up in hostilities between Israel and Hezbollah that fanned fears of an escalation in the region.

In a much-anticipated speech to a symposium of central bankers at Jackson Hole, Wyoming, Powell said: "The time has come for policy to adjust."

"The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks," he added.

"My confidence has grown that inflation is on a sustainable path back to 2 percent," he said, referring to the central bank's target.

Equities had already been on the rise on expectations the Fed would start cutting from two-decade highs next month, with debate now mostly centered on how big the reduction would be and how many more would follow.

Traders are betting on around one percentage point of reductions before the end of the year.

"Importantly there was a notable absence of caveats such as 'gradual/gradualism' as used by other Fed officials," said National Australia Bank's Tapas Strickland.

"The absence of caveats is likely what excited markets."

The remarks helped push all three main indexes more than 1 percent higher in New York.

Most of Asia followed suit on Monday, with Hong Kong, Mumbai, Shanghai, Sydney, Singapore, Taipei, Bangkok and Wellington all in the green.

However, there were losses in Tokyo and Seoul.

Paris and Frankfurt also opened slightly lower, while London was closed for a holiday.

"Yep, the Fed is ready to start slicing those interest rates. With the labor market cooling off and inflation finally inching closer to that elusive two percent target, Powell served up exactly what Wall Street had been drooling over," said independent analyst Stephen Innes.

"Right now, investors are in dreamland — having their cake, eating it too. The dream scenario? A series of rate cuts that somehow dodge the recession bullet," he said.

However, he warned that "the market's next big move hinges on whether the latest US data points to a gentle slowdown or the first tremors of a full-blown recession. The stakes? They couldn't be higher."

Attention will now turn to the release of a string of economic figures, including US jobs, inflation and personal income.

Tokyo stocks were weighed down by a strengthening yen, which rallied Friday on Powell's comments and an indication from Bank of Japan chief Kazuo Ueda that it could hike rates again if inflation and the economy performed as expected.

The yen was sitting at less than 144 per dollar in early trade.

Traders were keeping a nervous eye on the Middle East after Israel launched air strikes into Lebanon on Sunday, saying it had destroyed "thousands" of Hezbollah rocket launchers and thwarted a major attack.

The Lebanese group said it had unleashed a drone and rocket barrage of its own.

The news sent the price of oil higher, though the gains were tempered by hopes that the crisis would not develop into a full-blown war taking in other regional powers including Iran.

For its part, Hezbollah said its operation "was completed and accomplished."

Both main oil contracts rose Monday, extending Friday's rally of more than two percent that came on the back of Powell's interest rate comments.