File picture: Joshua Roberts/Reuters

Singapore - Asian stocks mostly rose on Monday, spurred by record high closes for the Dow and S&P 500 on bets that the Federal Reserve's policy will remain accommodative following lacklustre US data, which sent the dollar reeling to a 10-month low.

Chinese stocks fell over 2 percent in early trade but recouped some of the losses after data showed the economy grew at a slightly faster than expected pace of 6.9 percent in the second quarter thanks to robust industrial output and retail sales.

The CSI 300 was 0.7 percent lower, and the Shanghai Composite <.SSEC. was down 1.1 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.2 percent on Monday. Japanese markets were closed for a holiday.

Australian shares were 0.3 percent lower, while South Korea's KOSPI jumped 0.3 percent.

Wall Street closed higher on Friday, after data showed consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and subdued expectations of strong economic growth in the second quarter.

The chances of a rate hike in December fell to 43.1 percent after the data came out from 55 percent late Thursday, according to the CME Group's Fedwatch tool.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, hit a 10-month low early on Monday. It was trading flat at 95.156 after losing 0.6 percent on Friday.

"Friday’s US data led to more USD selling," Stephen Innes, senior trader at OANDA, wrote in a note.

"With less than a 50 percent December rate hike probability priced in, and with no supportive Fed speak on the calendar before July 26th, the dollar could struggle."

US 10-year Treasury yields, however, which fell to as low as 2.279, recovered to end at 2.3319 percent on Friday.

The dollar was also steady at 112.55 yen early on Monday, after closing down 0.6 percent on Friday.

The Bank of Japan is expected to keep its monetary policy settings unchanged when it meets on Wednesday and Thursday.

The weakness in the dollar saw other currencies soar, with the Australian dollar hitting its highest level in over two years and the Canadian dollar touching a one-year high early on Monday.

The Aussie was trading 0.2 percent lower than its Friday close at $0.7813, following a 1.3 percent surge, and the loonie was 0.1 percent weaker at C$1.2654 to the dollar, retaining Friday's 0.6 percent jump.

The euro slipped slightly to $1.14615, but remained close to its highest in a year hit last week, after gaining 0.6 percent on Friday.

In commodities, oil inched higher, extending last week's gains on signs of lower U.S. inventories and higher Chinese demand.

US crude rose 0.25 percent to $46.67 a barrel.

Global benchmark Brent added 0.3 percent to $49.07.

The dollar's loss was gold's gain, with the precious metal rising on Friday. Spot gold was 0.2 percent higher at $1,231.01 an ounce.