SYDNEY (Reuters) -Japanese shares led an Asian share market rally on Wednesday after U.S. President Donald Trump announced a trade deal with Japan and fuelled hopes of more to come, offsetting mixed U.S. earnings that highlighted the drags from higher tariffs.

Trump late on Tuesday announced a trade deal with Tokyo that he said will result in Japan investing $550 billion into the United States and paying a 15% reciprocal tariff. It followed an agreement with the Philippines that will see the U.S. collect a 19% tariff rate on imports from there.

"Though details are not yet available, it is commendable that the 25% baseline tariff was avoided," Norihiro Yamaguchi, senior Japan economist at Oxford Economics.

"In the short run I think lowered uncertainty will be welcomed in the equity market. But global trade policy uncertainty will remain high, meaning that today's conclusion will provide little upside to the real economy."

The U.S. president also said representatives from the European Union are coming for trade negotiations on Wednesday.

In another positive development, U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the August 12 deadline for negotiating a trade deal, Treasury Secretary Scott Bessent said.

Japan's Nikkei rose 1.7% on Wednesday as shares of automakers surged. Mazda Motor rallied 12% while Toyota Motor jumped 10%.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.2% underpinned by higher openings in Australia and South Korea.

The yen initially gained on the news, but was last flat at 146.68 per dollar.

Nasdaq futures climbed 0.1% and S&P 500 futures gained 0.2% in Asia.

Overnight, Wall Street closed mixed as investors assessed a spate of varied earnings and signs that Trump's trade war is hitting corporate profit margins. General Motors tumbled 8.1% after the automaker reported a $1 billion hit from tariffs to its quarterly results.

Investors are now waiting for results from Tesla and Google's parent Alphabet - the Magnificent 7 stocks that have driven much of the market rally fuelled by AI optimism.

In the foreign exchange market, the dollar index was flat at 97.45 against its major peers, having slipped 0.4% overnight to mark the third straight day of declines.

Benchmark 10-year U.S. Treasury yields ticked up 2 basis points to 4.3579, after slipping 3 bps overnight, as Trump continued to lash out at Federal Reserve Chair Jerome Powell for not cutting interest rates, although Bessent said there was no need for him to step down immediately.

Bessent did say the Fed's vital independence on monetary policy is threatened by its "mandate creep" into non-policy areas and he called on the U.S. central bank to conduct an exhaustive review of those operations.

Spot gold prices were steady at $3,429 an ounce.