Asian stocks took a step back on Monday after three consecutive weeks of gains as a retreat in oil prices left investors in a ponderous mood about the health of the global economy.

Oil prices slipped for a second day, extending Friday's slide of over 1 percent after the U.S rig count rose for the first time since December, renewing worries of a supply glut after an output freeze proposal had helped boost the market to 2016 highs.

The wobbles in the oil market, and general downturn in commodities combined with cooling growth in China, have rattled financial markets in recent months. Fears about the outlook for global growth was also instrumental in the Federal Reserve last week indicating a slower path to future rate increases.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.2 percent in early trade after entering positive territory for the first time this year on Friday. It is up 16 percent from January's lows.

With Japan closed for a holiday, Antipodean markets were broadly mixed in morning trade with New Zealand .NZ50 up slightly and Australia easing 0.1 percent.

In the absence of any fresh major economic data in a holiday-shortened week, investors were left to ponder the renewed softening bias from the Fed even as the U.S. economic recovery appeared to gather fresh steam.

Dollar bulls were hit hard last week after the Fed's less hawkish stance.

Fed Chair Janet Yellen sounded doubtful that a recent firming in U.S. inflation would be sustained, suggesting the central bank is in no hurry to tighten policy.

"Removing two full hikes from the baseline projections is still a significant move at a time the US economy still looks in pretty good shape," ANZ strategists wrote in a daily note.

"But one still has to wonder if the Fed is reverting back into old habits of providing markets with additional stimulus every time they throw a tantrum."

A brighter outlook for the U.S. economy helped Wall Street, where the S&P 500 Index.SPX gained 0.44 percent to close in the black on Friday. 

Rate markets also cheered the Fed's cautiousness with 10-year and two-year U.S. yields down by 14 and 16 basis points since the U.S. central bank's meeting last week.

Credit markets basked in the afterglow of the recent rally with an index of high-yield credit (HYG) extending gains to be up 9 percent in roughly a month.

In currencies, the dollar index .DXY was little changed at 95.042, not far from a five-month trough of 94.578 set on Friday.

The greenback fetched 111.51 yen JPY=, still within reach of Friday's 17-month low of 110.67. The euro, which last week scaled a one-month peak of $1.1342, stood at $1.1271EUR=.

The Australian dollar AUD=D4 consolidated gains after hitting its highest level in nine months last week at 0.7681 per dollar. It was changing hands at 0.7591 on Monday.

The front-month in U.S. crude's West Texas Intermediate (WTI) futures CLc1 fell more than a 1 percent to $38.98 per barrel after briefly peaking above $41 per barrel, its highest since last December.

Brent crude's front-month LCOc1 edged lower to $40.94 per barrel after hitting this year's peak of $42.54 per barrel.