Brent crude rallies on Libya output; US stocks flat

Credit: Reuters/Daniel Munoz

1 of 7. An office worker walks past the board of the Australian Securities Exchange building displaying its logo in central Sydney April 5, 2013.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.7 percent, recovering a chunk of last week's 1.1 percent loss -- the biggest in two months -- that was driven by concerns that China may tighten policy to keep prices under control.

Australian shares .AXJO put on 1.2 percent to reach their highest since June 2008, Hong Kong's Hang Seng .HSI added 0.4 percent, and South Korea's KOSPI .KS11 rose 0.3 percent.

Japan's Nikkei .N225 climbed 1.0 percent, clawing back some of Friday's 2.7 percent drop.

'The market is getting bought back after excessive selling on Friday... but I don't think we will be testing new highs,' said Kenichi Hirano, strategist at Tachibana Securities of the Nikkei.

Many traders suspect further gains in Asia may be limited as investors keep a wary eye what steps Chinese policymakers might take to cool property prices and inflation.

Several markets in Asia are closed for public holidays on Monday, including New Zealand and the Philippines.

RISK IN PLAY

With risk appetite on the mend, demand for the safe-haven yen waned. That saw the Australian dollar gain 0.5 percent to 93.68 yen, and both the euro and dollar edged up slightly to 134.74 and 97.52 respectively.

Against the dollar, the euro was a tad firmer at $1.3814 and within striking distance of Friday's two-year high of

$1.3833.

The dollar has been under broad pressure in the past few weeks on growing expectations the Federal Reserve will maintain its massive stimulus program into next year.

The Fed's policy-setting arm meets on Oct 29-30 and is expected to hold off any move to scale down its $85 billion monthly bond-buying program.

Analysts reckon policymakers want to see the impact of the U.S. budget battle that took the country to the brink of a debt default and caused a partial government shutdown.

'The FOMC should be a non-event... the Washington debates cloud the growth outlook, so forget about tapering,' analysts at JPMorgan wrote in a client note, adding the April 2014 meeting looked like the soonest start for any tapering.

In contrast to equities, commodities got off to a sleepy start with copper a touch lower at $7,178.25 a metric ton (1.1023 tons), while U.S. crude oil slipped 0.1 percent to $97.72 a barrel. Spot gold was steady $1,352.44 an ounce.

(Additional reporting by Tomo Uetake in Tokyo; Editing by John Mair)

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