Asian shares pulled further away from 14-month peaks on Monday after disappointing earnings from U.S. corporate bellwethers such as General Electric Co
The dollar edged up, thanks mainly to a retreat in the euro as European policymakers voiced some concerns that the single currency's surge is approaching levels that would damage the euro zone's recovery. Eurogroup Chairman Jean-Claude Juncker said he was concerned about a continuous euro rise.
The U.S. currency's gains helped nudge gold and oil prices lower, though activity was limited as investors focused on what the next batch of quarterly earnings will say about how companies are managing the recovery from the deepest global recession in decades.
Some 135 of the companies in the S&P 500 will report quarterly results this week, with the battered financial sector expected to post the highest growth rate, according to Thomson Reuters data.
What we're seeing is just profit-taking, with Wall Street's Friday fall providing the excuse, along with a sense that the market may have risen too far, too fast, said Noritsugu Hirakawa, a strategist at Okasan Securities in Tokyo.
The benchmark MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> slipped 0.6 percent, tracking a 0.8 percent drop in the S&P 500 <.SPX> on Friday, but was not far from its 14-month peak hit on Thursday.
Asia ex-Japan shares remain among the top performers in the world as the region has powered out of the recession the strongest, while its major companies have benefited from a pick-up in demand for electronics.
The Thomson Reuters index of Asia ex-Japan shares <.TRXFLDAXPU> slipped 0.7 percent.
CREDIT SPREADS TIGHTEN
The latest run higher in stocks has been accompanied by an investor shift into Asian fixed-income and credit markets that has pushed spreads tighter, prompting issuers to roll out new bonds to take advantage of attractive funding levels.
The iTraxx credit derivatives index of top Asian companies was quoted at 96.7 basis points after shrinking below the 100 basis points threshold last week for the first time in 17 months, underscoring the strong demand for higher yields.
In currencies, the euro slipped 0.2 percent to $1.4858 and shed 0.3 percent against the yen to 135.10 yen. The dollar index, a gauge of its performance against six major currencies, rose 0.2 percent to 75.771 <.DXY>.
The dollar's slight rise put pressure on commodities. U.S. crude oil prices were steady at $78.53 a barrel after hitting a 12-month high of $79.05 in early trade, while gold shed 10 cents an ounce to $1,050.70.
Government bonds were mixed and swap rates fell in some countries after having surged in Australia, New Zealand and South Korea last week on expectations that their respective central banks will be lifting interest rates in coming months.
The five-year Korean swap rate dipped 2 basis points to 4.57 percent after reaching 4.60 percent on Friday, a one-year high. The five-year Australian swap rate dropped 8 basis points to 5.97 percent, off a one-year peak of 6.12 percent.
Reserve Bank of Australia Assistant Governor Philip Lowe said that it was appropriate for the central bank to go back to a more normal monetary policy setting, reinforcing expectations another rate hike is coming in November.
(Additional reporting by Elaine Lies in Tokyo)
(Editing by Kim Coghill)