Asian shares edged higher and the dollar was steady against the yen on Monday after the U.S. market hit an almost four-year high last week and with higher European stocks reflecting signs of growing stability in the euro zone.
With investors buoyed by those positive signs, financial spread bets are for major European markets <.FTSE> <.FCHI> <.GDAXI> to open 0.2 to 0.4 percent higher. <.L> <.EU>
The MSCI Asia Pacific ex-Japan index <.MIAPJ0000PUS> inched up 0.2 percent after last week's modest 0.8 percent gain.
Japan's Nikkei <.N225> was also up 0.2 percent, at 10,151, having earlier reached an 8-month high above 10,172 with slower-moving blue-chips being bought up. <.T>
U.S. economic data continues to be solid, said Fujio Ando, senior managing director at Chibagin Asset Management in Tokyo.
Confidence in the U.S. economy will push the Nikkei up to 10,200 even this week, although we will have to watch the housing data this week, Ando said.
Global economic growth will slow this year, with the United States looking much improved but risks still to the downside as Europe's financial markets remain fragile, Zhu Min, deputy managing director of the International Monetary Fund, said on Monday.
Zhu, a former deputy governor of the Chinese central bank, was speaking a day after IMF Managing Director Christine Lagarde said the global economy had stepped back from the brink and signs of stabilisation were emerging.
Reserve Bank of Australia Governor Glenn Stevens said on Monday the economy was not doing too badly, but cautioned that Europe's debt problems were still a global risk. He was upbeat on the outlook for China and the rest of Asia.
U.S. consumer prices rose the most in 10 months in February as the cost of gasoline spiked but there was little sign that underlying inflation pressures were building up. Surging gasoline prices put a small dent in consumer confidence early this month, other data showed on Friday.
On Friday, the benchmark Standard & Poor's 500 Index <.SPX> stayed above the 1,400 level it reached last week for the first time since May 2008. European stocks hit their highest level since before the market's slump in late July.
U.S. consumer prices: http://link.reuters.com/cam27s
U.S. consumer sentiment: http://link.reuters.com/xem27s
Iran reports: http://link.reuters.com/duf27s
The yen was on the defensive in Asia on Monday, hitting a five-month low against the euro of 110.13 yen and held near an 11-month low of 84.19 yen against the dollar. The euro steadied around $1.3170.
Currency speculators raised their bets against the yen in the latest week to their highest in 11 months.
Analysts have said the dollar's strength was underpinned by the rise in U.S. Treasury yields. Benchmark 10-year yields touched four-month highs of 2.36 percent on Friday, gaining more than 25 basis points in a week.
Barclays Capital analysts said concerns have emerged about Asian growth prospects. The political environment in Europe leading up to French and Greek elections in coming weeks also warrants close observation, they said.
As such, we expect risky assets to continue to hold their own, but given the lingering uncertainties, we prefer to remain close to the beneficiaries of a strong U.S. economy, they said.
Oil extended gains on Monday after rising more than 2 percent late last week, drawing support from the continuing tensions over Iran's disputed nuclear programme and the potential for supply disruptions in the region.
Brent oil was up 0.1 percent to $125.97 a barrel, after settling up $3.21 on Friday, while U.S. crude was up 0.3 percent to $107.38 a barrel, after settling up $1.95 on Friday.
While Treasuries lost their safe-haven appeal, gold gained on its safety perception as oil prices climbed. Spot gold rose 0.5 percent to $1,662 an ounce.
Asian credit markets firmed on Monday, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing sharply by 11 basis points.
The European Central Bank's aggressive liquidity injection has soothed fears about a credit crunch in the euro zone and stabilised market rates, but wariness persisted about the risk of other highly indebted euro zone countries needing similar debt swaps to Greece.
In a crucial test of investors' appetite for Europe's rescue fund, the European Financial Stability Facility will take its first stab at selling ultra long-bonds as early as this week.
(Additional reporting by Mari Saito in Tokyo; Editing by Paul Tait)