Asian stocks eased on Monday, pulling further away from 13-month highs hit last week, as investors worried prices may have raced too far ahead of economic fundamentals, with shares in China feeling supply pressures ahead of a string of IPOs.

Major European and U.S. stocks futures were lower, pointing to a weaker opening in their respective markets. Futures on the Dow Jones Euro Stoxx 50 were down 0.2 percent while U.S. equity futures were 0.15 percent lower.

In South Korea, the influx of foreign money into stocks boosted the won to an 11-month high, forcing authorities

to intervene in order to check the currency's strength and prevent a decline in the country's export competitiveness.

The U.S. dollar extended last week's gains with traders covering their short positions ahead of this week's Federal Reserve policy meeting and a Group of 20 summit.

The greenback, measured against a basket of currencies <.DXY>, was up 0.55 percent at 76.845 by late afternoon, off a one-year low of 76.01 struck on Sept 17.

That rise pulled gold away from near 18-month highs to a one-week low of below $1,000 per ounce. The yellow metal has gained 16 percent so far in 2009 but has still failed to top its all-time peak of $1,030 an ounce struck last year.

Trade was sluggish and volumes are on the lower side in Asia with Japan shut until Thursday for holidays. Markets in Singapore, India, Indonesia, Malaysia and the Philippines were also shut on Monday for holidays.

The MSCI index of Asia Pacific stocks traded outside Japan dipped 0.3 percent, after surging 80 percent since mid-March when global markets started to rally on hopes that the financial crisis had bottomed out.

This has taken price-earnings multiples on a 12-month forward basis to above 15.2 times, near this year's high of 15.5 struck in early August, according to data from global estimates tracker Thomson Reuters I/B/E/S.

Valuations are certainly more expensive than they have been, but we don't think alarmingly so, said Mark Konyn, who oversees about $11 billion as Asia-Pacific chief executive of RCM, a unit of Allianz Global Investors.

Fund managers expect Asian corporates to report an improvement in financial performances and said the overall tone in the market would remain positive.

The macro environment has stabilized. We expect Asian corporate earnings to make a comeback quite well, said Victoria Ip-Cheung, head of fixed income at MFC Global Investment Management, which has $250 billion assets under management.

While stock markets in the region would increasingly factor in this improvement, some saw changes in investment themes.

Investors have positioned themselves away from some of the China themes and more to themes aimed at recovery in the U.S., Konyn said.

U.S. markets ended modestly higher on Friday on optimism that the global economic recovery will be strong enough to boost corporate profits and justify higher share valuations. <.N>

The U.S. Federal Reserve is expected to keep the benchmark interest rate unchanged in a range of zero to 0.25 percent at the end of a two-day meeting on Wednesday as it waits to see if a tentative recovery finds solid footing.

Primary debt dealers surveyed by Reuters expect the Fed will not start raising rates until next year for fear of derailing the recovery. Many see a one-in-five chance of a double-dip recession, in which an economy sinks back into recession after a brief rebound.

Investors will also be eyeing a meeting of leaders from the Group of 20 developed and emerging nations on Sept 24-25.

The leaders are expected to reiterate that economic support measures will remain in place as long as needed, even as they look beyond crisis fighting to issues such as bankers' bonuses, financial regulation and global trade imbalances.


Highlighting investor skittishness, shares in Shanghai <.SSEC> fell more than 3 percent at one point before edging back into positive territory by late afternoon.

The decline was sparked by concerns about a sharp increase in shares from upcoming IPOs and amid worries the recent gains may be overdone.

Analysts said subscriptions for 10 companies to be listed on China's Nasdaq-style market to fund high-growth start-ups had come faster than expected and could lead to a mild consolidation for the index.

South Korean stocks also eased 0.3 percent after a four-session gaining streak with foreigners piling into the country's markets ahead of South Korea's upgrade to developed market status by FTSE effective Monday.

The Korea Composite Stock Price Index <.KS11> (KOSPI) was down 0.25 percent after dropping 0.5 percent to the day's low in early trade.

Foreigners have been net buyers on all but two days this month, bringing in $4.1 billion in the last 11 sessions.

Foreign investors' buying has slowed following their aggressive accumulation of Seoul shares prior to South Korea's official joining of the FTSE, said Chung Seung-jae, a market analyst at Mirae Asset Securities.

The won currency was lifted by these inflows, rising to 1,199.9 per dollar, the highest since October 14, 2008.

Still, valuations in South Koreana stocks look relatively attractive.

The KOSPI's price multiple based on 12-month forward earnings estimates was about 9.7 as of Sept 18, compared with the region's multiple of over 15 times.

Buying... could pick up after third-quarter earnings figures if numbers come out strong, Chung added.

Australia's benchmark S&P/ASX 200 index <.AXJO> dropped 0.34 percent, led lower by weak resources stocks which were in turn depressed by softer commodity prices.

Oil prices eased below $72 a barrel as traders booked profits after a 5 percent rally last week.

(Editing by Kim Coghill)