Asian stock markets made a tentative recovery on Monday following last week's hammering as fears of a global credit crisis eased after central banks around the world pumped money into banking systems.

The yen also held steady and commodity prices firmed as credit jitters calmed a little, with oil prices rallying after a 5.5 percent slide last week.

Markets have been rocked for weeks by news of problems in banks and funds exposed to risky investment in U.S. mortgage and asset-backed markets, triggering fears that the cheap credit that has fuelled global growth might dry up.

Central banks in Europe, Asia and North America injected huge sums into the money market late last week in an effort to prevent money markets seizing up as the number of financial institutions revealing exposure to crumbling credit markets swelled.

The Fed also said it would provide cash as needed to ensure markets functioned smoothly in a rare comment last seen during the Sept 11, 2001 attacks.

The Bank of Japan pumped $5.1 billion of funds into the banking system in a one-week operation on Monday in a move to keep short-term rates in check.

Clearly central banks want to get to the bottom of the situation. If we don't get any more fresh bad news about other investment banks restricting access to their funds, I think things will settle down quickly, said Craig James, chief equity economist at CommSec in Australia.

By 0350 GMT, Tokyo's Nikkei average was up 0.3 percent while MSCI's measure of Asia Pacific stocks excluding Japan rose 0.4 percent.

The MSCI index is still down 9.6 percent from the record high set on July 24, but is up about 15 percent this year.


Investors bought beaten-down stocks such as banking shares, helping send National Australia Bank up 2.6 percent, while South Korea's top lender, Kookmin Bank, put on 1.7 percent.

Mining shares were also in favor with global miner BHP Billiton rising 1.6 percent, while Japan's Mitsubishi Materials and Sumitomo Metal Mining both rallied, further helped gains in industrial metals prices.

Shanghai copper rose more than 1 percent after London copper built on a recovery in the previous session, while London Brent crude oil rose 30 cents to $70.69 a barrel.

Among major regional markets, Australia's S&P/ASX 200 index added 1.4 percent, while Taiwan's TAIEX and South Korea's KOSPI edged down 0.2 percent. Singapore's Straits Times Index fell 1 percent.

But China's mainland stocks extended gains, pushing the Shanghai Composite Index to a new life high despite data showing consumer inflation at a 10-year high -- further boosting the case for further tightening measures.

China's market has surged by almost a quarter since global markets starting falling in late July, taking year-to-date gains to 80 percent.


The yen was steadier after last week's wild swings as investors waited to see if a money market squeeze from the spreading U.S. subprime mortgage distress would worsen.

A drop in risk appetite had investors unwinding carry trades, helping shore up the Japanese currency. In carry trades, investors borrow in low-interest rate currencies such as the yen, to buy higher yielding but riskier assets.

The moves by central banks have only calmed down markets intraday. The central banks cannot ease the concerns over subprime loans, said Masafumi Yamamoto, a currency economist at Nikko Citigroup.

The dollar slipped slightly to 118.30 yen from near 118.40 yen late in U.S. trade but remained well off a low of 117.19 yen set last week, while the euro was little changed at 162.10 yen, above Friday's 4-month low of 159.98 yen.

Against the dollar, the euro edged up to $1.3704, off a 1-½ week low of $1.3640 reached on Friday.

Japanese government bond (JGB) prices were off early lows as stocks struggled to extend gains and traders speculated recent market turmoil will make it hard for the Bank of Japan to raise interest rates this month, as had been expected.

The benchmark 10-year JGB yield was unchanged at 1.715 percent, after touching a high of 1.725 percent.