Asian shares and the euro inched up on Monday as signs of U.S. economic recovery underpinned sentiment, although trading was expected to be subdued with many markets closed for extended Christmas holidays.
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> was up 0.1 percent to a two-week high, while Tokyo's Nikkei stock average <.N225> opened up 1.3 percent. Japanese financial markets were closed on Friday for a holiday.
U.S., European and some Asian markets including Hong Kong and Singapore are closed on Monday.
Wall Street stocks rose on Friday, with the broad Standard & Poor's 500 Index <.SPX> breaking through its 200-day moving average after a four-day rally lifted stocks to bring the index up 0.6 percent for the year at last week's close.
We expect to see a quiet, yet cheery holiday market on the back of positive U.S. data all the way up to the end of the year in the absence of any new risk factors, said Park Hyung-jung, an analyst Meritz Securities.
U.S. consumer spending growth was tepid and a gauge of business investment fell for a second month in November, data showed on Friday, but recent labour and manufacturing figures implied a more-lasting and fundamental strengthening of the recovery.
The U.S. Congress on Friday approved a two-month extension of a payroll tax cut that will preserve income for most Americans, supporting their purchases of goods and services and support sentiment.
The euro was up 0.1 percent to $1.3054 (8364 pence), well above its 11-month trough of $1.2945 hit earlier this month.
The latest Commodity Futures Trading Commission data showed investors reduced their short euro positions slightly, potentially giving support to the single currency.
Currency speculators boosted their bets in favour of the U.S. dollar.
Given a lack of factors to trade and low liquidity, activity is expected to be lackluster this week, but sluggish results of French and Italian government debt sales scheduled this week could pressure the euro amid an absence of progress in bolstering euro zone safety net, Barclays Capital said in a research note.
Emerging bright signs for the U.S. economic outlook helped revive some appetite for riskier assets, curbing demand for safe-haven U.S. and German government bonds.
Asian credit markets firmed in early Asia on Monday, with spreads on the iTraxx Asia ex-Japan investment grade index narrowing by several basis points in subdued trade.
Key European interbank lending rates fell on Friday as the European Central Bank's first-ever injection of 3-year liquidity earlier last week added nearly half a trillion euros in the financial system.
But dollar funding strains remained, reflecting wariness about European banks' health and risks of another global credit crunch, making banks reluctant to borrow to each other.
The London interbank offered rate for three-month dollars rose further on Friday to 0.57575 percent, the highest since early July 2009, from Thursday's 0.57375 percent.
The 10-year Italian government debt yield stayed near 7 percent, above which many say is unsustainable for managing public finances and the economy, while 10-year Spanish government bond yield also stood at an elevated 5.40 percent.
(Additional reporting by Joonhee Yu in Seoul; Editing by Yoko Nishikawa)