Picture: Yuriko Nakao/Reuters

Singapore - Asian stocks slipped on Monday as demand for riskier assets ebbed after their recent strong gains, while the European Central Bank's apparent equanimity at the euro's two-year highs left the dollar languishing.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent.

Japan's Nikkei dropped 0.9 percent, pressured by a stronger yen.

Chinese shares bucked the trend, with bluechips up 0.3 percent and the Shanghai Composite advancing 0.2 percent. Hong Kong's Hang Seng added 0.4 percent.

Australian shares retreated 1 percent and South Korea's KOSPI edged down 0.1 percent.

On Friday, global stocks ended a 10-day winning streak, taking a breather from a rally that had propelled them to a record high in the previous session. The declines continued on Monday, with the index marginally lower.

Wall Street indexes ended Friday flat to about 0.15 percent lower, as disappointing earnings from General Electric and energy shares weighed.

European shares also closed lower, with Germany's DAX slumping 1.7 percent, dragged lower by the euro's strength.

The euro was trading slightly higher at $1.1669 on Monday, just a whisker below a two-year high of $1.1684 hit earlier in the session.

ECB President Mario Draghi's comments on Thursday, which conspicuously avoided citing the euro's recent strength as a problem, emboldened traders convinced the central bank will begin tapering its bond-buying program later this year.

"There has been very little back-pedalling on the long euro storyline as dealers continue to place much emphasis on Draghi declining the opportunity to talk down the currency post-ECB minutes," Stephen Innes, head of Asia-Pacific trading at OANDA, wrote in a note.

"And factoring in the expanding US political sinkhole which is weighing on broader USD sentiment, it's unlikely the market has run out of steam," he wrote, adding he expects the euro to test the August 2015 high of $1.1715 "sooner than later".

The dollar index, which tracks the greenback against a basket of trade-weighted peers, crept higher but remained subdued on Monday.

After touching 93.823, its lowest level since June 2016 early on Monday, it edged up to 93.908, marginally above Friday's close.

The dollar continued to slide against the yen, however, retreating 0.1 percent to 111.01 yen.

Markets are awaiting the Federal Reserve's meeting on Tuesday and Wednesday for an update on its plan to start normalising its balance sheet.

"All eyes will be on the Fed this week, with market participants eager to see if the Fed formally announces the start of its balance sheet normalisation plan or opts to wait until September," Michala Marcussen, global head of economics at Societe Generale, wrote in a note.

"We are in the September camp, but we acknowledge that it is a coin toss between this week's meeting and the next one."

In commodities, oil remained pressured by a consultant's forecast of a rise in OPEC production for July despite the group's pledge to curb output, reviving concerns about oversupply.

But expectations that the joint OPEC and non-OPEC ministerial meeting later in the day would address rising production from Nigeria and Libya, two OPEC members exempted from the cuts, bolstered prices.

Global benchmark Brent crude added 0.3 percent to $48.19 a barrel, after Friday's 2.5 percent tumble, while US crude edged up 0.2 percent to $45.85, after Friday's 2.2 percent slump.

Gold shone on the dollar's weakness and a decline in risk appetite, with spot gold just slightly lower at $1 253.61 an ounce, retaining most of Friday's 0.8 percent jump, and scarcely below a one-month high hit earlier.