Tokyo - Asian shares rose on Monday, boosted by a positive tone in US equities last week, while the yen fell to a near seven-month low against the dollar on expectations a new government after next month's election in Japan may deliver more stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5 percent, recovering from a nine-week low marked on Friday.
Australian shares rose 0.6 percent while South Korean shares opened 0.5 percent higher.
Japan's Nikkei average, which bucked the broad Asian downtrend on Friday and surged 2.2 percent to a two-week closing high, opened up 1.3 percent.
“The market bullish sentiment will continue today,” said Takashi Hiroki, chief strategist at Monex Inc, adding that sentiment had changed as trading volume hit an eight-month high on Friday and any short-term profit-taking would likely to be limited.
Speculation that the leader of the opposition Liberal Democratic Party, which is expected to win the December 16 elections, will call for more stimulus including further aggressive easing by the Bank of Japan also undermined the yen.
The dollar hit a near seven-month high against the yen at 81.55 yen on Monday.
The BOJ begins a two-day policy meeting on Monday, with the bank not expected to take fresh policy steps.
Aside from the Japanese politics, market players will eye ongoing negotiations by US policymakers to avoid a budget crisis and European officials' meeting on Tuesday to discuss aid for debt-stricken Greece.
Hope that US politicians would find common ground to steer clear of the “fiscal cliff” boosted US stocks on Friday. European shares sank to a 3-1/2-month closing low, for their worst week since the end of May, on persistent concerns over US fiscal policy and the euro zone debt crisis.
US Treasury yields fell to their lowest levels in over two months on Friday as scepticism over the US budget talks drew some safe-haven bids.
On Friday, top lawmakers from both major US political parties hinted at the possibility of a budget compromise that involves spending cuts and additional revenue, although they were short on details.
“The good news is the tone of Friday's White House meeting but the prospect of no agreement until at least mid-December fits our view that the two sides are starting negotiations from rather distant points,” Sean Callow, senior currency strategist at Westpac bank in Sydney, said in a note.
“As such, there will be plenty of negative headlines in coming weeks that weigh on Treasury yields and boost USD, which is yet again trading like a safe haven even when the bad news is generated by the US.”
The dollar eased 0.1 percent but remained near a two-month high of 81.455 hit on Friday against a basket of key currencies .
The euro inched up 0.1 percent to $1.2757, with traders eyeing whether euro zone finance ministers and International Monetary Fund's Managing Director Christine Lagarde would agree on how to make Greece's debt manageable.
“As the EU prepares a bundled aid package to avert a Greek default, headlines coming out of the meeting may fuel a relief rally in the euro, but we will maintain our bearish forecast for the single currency as the region faces a deepening recession,” said David Song, currency analyst at DailyFX.
US crude futures rose 0.8 percent to 87.65 a barrel. Oil prices rose on Friday as Israeli attacks on Gaza escalated conflict between Israel and Palestinians and stoked supply concerns. - Reuters