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 The dollar edged up but held close to Friday's 2 1/2-week lows,
after weak U.S. data on Friday reinforced expectations the Federal
Reserve would not raise interest rates any time soon.
The stock rally looked set to continue on Wall Street, with index
futures indicating the market would open higher.
The pan-European FTSEurofirst 300 index was up 0.4 percent after
falling in early deals on concern about a lack of progress in talks
between indebted Greece and its creditors.
Deutsche Bank, down 3.8 percent, took its toll on the index as
investors gave a big strategic overhaul under co-chief executives
Anshu Jain and Juergen Fitschen a thumbs down, though it rose off
its lows.
"There are 2020 targets and savings/investment plans which we and
the market will take with a grain of salt, given their chequered
history," said Omar Fall, an analyst with Jefferies International.
The MSCI world equity index, which tracks shares in 45 countries,
hit a new record high of 442.13 points before pulling back. It was
last up 0.1 percent.
Chinese shares hit fresh seven-year highs on prospects of more
stimulus, infrastructure projects, and state firm mergers.
The CSI300 index, which has almost doubled since late October,
closed 2.2 percent higher.
Caution before a Bank of Japan policy decision on Thursday and over
company earnings weighed on Japanese shares and the Nikkei 225 index
ended down 0.2 percent.
Nonetheless, MSCI's broadest index of Asia-Pacific shares outside
Japan rose 0.6 percent to its highest since December 2007.
The dollar was up 0.3 percent against a basket of major currencies
but still close to Friday's 2 1/2-week low.
The Fed begins a two-day policy meeting on Tuesday with a slew of
recent sub-par indicators prompting analysts to downgrade their view
of the U.S. economic outlook and to push back expectation of when
the Fed will hike rates for the first time since June 2006 until
later this year.
The dollar was up 0.4 percent at 119.33 yen, though Fitch cutting
Japan's credit rating by one notch to A had little impact, and by a
similar amount against the euro at $1.0824.
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"It may be that the market is looking to get back into dollar longs
and I think the extent to which the Fed is prepared to look through
this weaker patch of data will be the important element this week,"
said Ian Stannard, European head of FX strategy at Morgan Stanley in
London.
LOW-RISK
Worries over Greece, which faces running out of cash within weeks
unless it can reach agreements in talks that appear to be going
nowhere, pushed yields on Greek government bonds higher <0#GRTSY=>
and those on low-risk German debt lower.
"It is difficult to see how an agreement can be made at this stage,"
said Gianluca Ziglio, executive director of fixed income research at
Sunrise Brokers. "The market has been unprepared for this," he said.
German 10-year yields last stood at 0.15 percent, steady on the day.
Brent crude oil prices held near a 4 1/2-month high above $65 a
barrel, supported by worry that fighting in Yemen might disrupt
supplies, and a fall in the number of active U.S. drilling rigs to
its lowest since 2010. Brent last traded 26 cents lower at $65.02 a
barrel.
Gold recovered from a five-week low, with investors focused on the
Fed meeting. It last stood at $1,181.93 an ounce.
(Additional reporting by Hideyuki Sano in Tokyo, Patrick Graham,
John Geddie and Alexis Akwagyiram in London; Editing by Andrew
Heavens and Toby Chopra)
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