The euro rose on Monday after the leaders of France and Germany pledged to unveil a plan to solve the euro zone's sovereign debt crisis by the end of the month, but Asian shares struggled to make gains as Hong Kong and China stocks dragged.
Commodities were mostly stronger, helped by optimism on action in Europe and better-than-expected U.S. jobs data on Friday that eased fears of renewed recession in the world's biggest economy.
They are looking at sorting out the European debt issue sooner rather than later, said Phillip Weinberg, dealer at Melbourne-based investment management firm Karara Capital.
And the market overall is still factoring in an emergency or disaster-type situation which is less likely to eventuate.
MSCI's broadest index of Asia Pacific shares outside Japan was flat, while Tokyo markets were closed for a public holiday.
Australian .AXJO and South Korean market shares rose, but Hong Kong stocks fell 1.0 percent, hit by falls for financials and some property developers and Shanghai's main index lost 0.2 percent.
Fears of a possible hard landing in the world's second-largest economy have roiled Hong Kong and mainland markets over the past couple of months, hitting banking, property and resources-related shares the most, although some players now see a buying opportunity.
Chinese stocks are pricing in negative earnings growth to perpetuity, Citigroup analysts said in a note on Monday. From these levels, markets have risen in nine out of ten cycles. Increasingly, thoughts need to turn toward what to buy rather than sell.
European policymakers have been under pressure from volatile financial markets to get to grips with the euro zone crisis, which many fear is heading inexorably toward a default by Greece -- and perhaps others -- that could unleash turmoil in the banking system.
Underlining the urgency of finding a fix, Belgium said Monday it would buy the Belgian banking business of stricken lender Dexia (DEXI.BR), the first victim of the two-year-old crisis, for 4 billion euros.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said after talks in Berlin Sunday that their goal was to come up with a sustainable answer for Greece's woes, agree how to recapitalise European banks and present a plan for accelerating economic coordination in the euro zone by a G20 summit in Cannes, France, on Nov. 3-4.
The euro rose around 0.6 percent to $1.3452, from $1.3375 on Friday, when it had come under pressure following ratings downgrades of Italy and Spain.
Hopes for progress in Europe helped improve sentiment in credit markets, with a modest tightening of spreads measured by iTraxx's Asia ex-Japan investment grade corporate index.
Oil firmed, building on Friday's gains on the back of U.S. payrolls data showing employers added more jobs last month than analysts expected, which eased fears of renewed recession in the world's biggest consumer.
Brent crude rose 0.2 percent to $106.10 a barrel and U.S. crude gained 0.7 percent to $83.59.
But copper fell 0.7 percent to around $7,320 a tonne, giving up some of the gains from last week's bounce that saw it post its biggest weekly gain in six months.
Gold, which in recent weeks has switched from a negative to a positive correlation with riskier assets such as industrial commodities and stocks as safe haven investors turned instead to the dollar, rose 0.9 percent to around $1,652 an ounce.