A leading Asia-Pacific stock index hit a record high on Monday as shares took their cue from gains on U.S. markets late last week, though trading was light due to holidays in Japan, South Korea and Taiwan.
The U.S. dollar continued to hover near 15-year lows against a basket of currencies and a record low versus the euro, with the Australian and New Zealand dollars both near multi-week highs. Oil was a touch easier and gold firmer.
With no major data risk in either Europe or the U.S. today, expect a slow start to the week, Sue Trinh, senior currency strategist at RBC Capital Markets, said in a note to clients.
MSCI's measure of Asia Pacific stocks excluding Japan was up 0.8 percent at a record high by 0205 GMT. The index has rebounded 27 percent from a trough during the market sell-off in August and is up 29 percent so far this year.
U.S. stocks rose on Friday after robust results from software maker Oracle Corp brightened the outlook for technology, helping the Dow industrial average and the S&P 500 turn in their best weekly performance since March.
The bullish tone spilled over into Australia, where the benchmark S&P/ASX 200 index neared an all-time high on Monday, as mining firms were boosted by firmer metals prices and explosives firm Orica Ltd gained on a U.S. acquisition.
Markets in Hong Kong, New Zealand and Singapore also rose.
Still, analysts cautioned that further volatility is expected as lingering worries about the outlook for the U.S. economy and turmoil in global credit markets continue to keep investors nervous.
Markets are still a bit edgy, said Simon Doyle, head of strategy at Schroder Investment Management. The broader issue is still about the consequences of the credit tightening and the housing slowdown in the U.S. and whether that flows through to the economy.
Australia's central bank continued to drain funds from the banking system as interbank money market rates stayed well below recent peaks and credit markets showed some stability.
Credit markets have steadied after last week's half-point U.S. rate cut, which also helped trigger a decline in the dollar.
The Federal Reserve's 50-basis point cut in overnight rates to 4.75 percent stirred expectations for even more monetary easing that would erode the dollar's interest rate appeal, compared with the euro and higher-yielding currencies.
Market players are keeping a close eye on whether the dollar breaks an all-time low of 78.19 (.DXY: Quote, Profile, Research) struck on its trade-weighted index in 1992, a development that could ignite a further sell-off in the beleaguered U.S. currency.
The euro has vaulted to an all-time high against the dollar above $1.41 that has stirred worries about the potential hit to European exports and prompted more criticism of the European Central Bank by the French government.
The euro was little changed from late U.S. trade on Friday at $1.4090, having climbed as far as $1.4121 on electronic trading platform EBS late last week -- its highest since the single European currency's launch in 1999.
The dollar fell 0.2 percent to 115.26 yen but has rebounded from a low of 113.98 yen last week as the Japanese currency has suffered from investors using it as a cheap source of funds to buy higher-yielding currencies in the carry trade.
Oil prices eased, extending the previous session's decline, as oil and gas producers in the Gulf of Mexico restored more output after a mild storm triggered evacuation and production cuts.
U.S crude for November delivery fell 30 cents to $81.32 a barrel by 0210 GMT. Oil had dipped 16 cents on Friday to more than $2 below the all-time high set by the October-month contract on Thursday.
Spot gold gained around $2 an ounce to $734 as the dollar struggled. The precious metal had hit $739 on Friday, its highest since early 1980.