Investors in Asia generally took China's latest move to fight inflation in their stride on Monday, with Japan's Nikkei posting modest gains, while the euro slipped as the market waited to see if governments will beef up a euro zone rescue fund.

Upbeat earnings from JPMorgan helped lift some financial stocks in the region, but mining stocks struggled after China on Friday raised banks' required reserves (RRR) for the fourth time in over two months, fuelling worries the country's voracious appetite for commodities will cool.

With growth still strong, Beijing will likely battle inflation wholeheartedly. Get ready for more hikes in both RRR (at least another 150 bps) and interest rates (two, 25 bps) in the next six months, HSBC economists Qu Hongbin and Sun Junwei wrote in a report.

Japan's Nikkei index <.N225> rose 0.4 percent, helped in part by gains in financial shares. Sumitomo Mitsui Financial Group <8316.T> climbed 0.7 percent.

The market is recouping losses made last week and sentiment has been brightened by financials gaining on a strong start to the U.S. earnings season, said Yumi Nishimura, a senior market analyst at Daiwa Securities Capital Markets.

Stocks elsewhere in Asia were more subdued, with MSCI's index of Asia Pacific shares excluding Japan <.MIAPJ0000PUS> slipping 0.3 percent.

Hong Kong's Hang Seng index <.HSI>, Australia's S&P/ASX 200 index <.AXJO> and China's Shanghai Composite Index <.SSEC> were all lower. South Korea's KOSPI <.KS11> hit a record high at 2,118.86, before paring gains to be little changed on the day.

Global miners BHP Billiton and Rio Tinto both fell about 1.0 percent.

According to EPFR Global, flows into the emerging market equity funds that it tracks slowed in the week ended January 12 due to worries that high inflation rates will trigger more measures to rein in price pressures.

But underlying appetite for risk persisted, with emerging market local currency and high yield bond funds enjoying solid weeks, EPFR noted.

Asian high-yield bond issuers have wasted no time this year in taking advantage of the healthy appetite for their paper.

Last week, PRC property developer Evergrande Real Estate Group made history with a 9.25 billion yuan ($1.4 billion) synthetic renminbi bond issue, the biggest to date in the fast growing market.


The euro slipped to $1.3338, having rallied some 4 percent last week to reach $1.3456 on Friday -- a high not seen since mid-December.

European Central Bank President Jean-Claude Trichet's tough talk on fighting inflation and expectations that the EFSF rescue fund will be expanded had helped underpin euro.

All eyes are on whether euro zone finance ministers can agree to boosting the fund, a key topic of discussion at their meeting due to start later on Monday.

BNP Paribas strategists said it expects the euro to rise toward $1.3600 in the weeks ahead and have changed their strategy to buying the euro against the dollar on dips.

However, this does not take away from our fundamentally bearish EUR stance.

Commodity prices were little changed with U.S. crude steady at $91.49 a barrel, not far off a two-year high of around $92.58 set early this month.

Copper on the London Metal Exchange edged up 0.2 percent to $9,665 a tonne, not far from a record high of $9,754 set on January 4.

U.S. markets are shut on Monday for a public holiday, but the flow of earnings results will kick up a gear this week with Apple , Citi and Goldman Sachs among major firms due to unveil their results.

(Editing by Kim Coghill)

(Additional reporting by Antoni Slodkowski in Tokyo)