(Reuters) - An index of Asian shares got off to a lackluster start on Monday as many countries in the region returned from Lunar New Year holidays, with sentiment supported by relief that Greece reached a deal to avert an immediate fiscal crisis.
Euro zone ministers late on Friday agreed to extend Greece's financial rescue package by four months, a shorter extension that the six months the country had sought. Although an initial relief over the last-minute deal boosted Wall Street shares to record highs late on Friday, Asian markets as a whole saw little follow-up buying.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat from its Friday close, after earlier drifting lower.
U.S. stock futures ESc1 were nearly flat in Asian trading but Japan's Nikkei took a cue from Wall Street's gains to rise 0.8 percent and scale another 15-year high.
"The debt deal is giving comfort to the market," said Masashi Oda, chief investment officer at Sumitomo Mitsui Trust Bank, but added that investors' risk appetite is mainly due to Japanese shares' attractive valuations.
Activity in Asia is likely to pick up this week as many market players return from Lunar New Year holidays, though the mainland Chinese markets will remain closed until Wednesday.
Oil prices edged up after early falls on Monday as parts of Asia returned from the holiday and investors were cautiously optimistic about the Greek debt deal. Brent LCOc1 rose about 0.2 percent to $60.36 a barrel, while U.S. WTI crude CLc1 also added about 0.2 percent to $50.87.
Greece has to provide a list of reform measures to euro zone by Monday to secure financing but domestically it came under attack for selling "illusions" to voters after failing to keep a promise to extract the country from its international bailout.
"Ultimately Greece has to carry out reforms but it is uncertain given that the government has won by promising not to reform," said Hiroki Shimazu, senior market economist at SMBC Nikko Securities.
The euro traded at $1.1382, little changed from Friday's late U.S. levels and within its well worn trading range of the past few weeks centering around $1.13-1.15.
The yen was also steady, trading at 118.99 yen against the dollar, after a rise in U.S. Treasury yields after the Greek bailout agreement on Friday helped the U.S. unit climb off a low of 118.30 yen.
Later on Monday, Germany's Ifo business climate index is expected to show a continued recovery in the euro zone's powerhouse economy.
Looking ahead, investors will focus on Federal Reserve Chair Janet Yellen's testimony on the economy and monetary policy before the U.S. Congress on Tuesday and Wednesday.
Although the minutes from the Fed's last policy meeting published last week were more dovish than expected, increasing signs of strength in the U.S. jobs market could revive expectations of a rate hike in June.