GLOBAL MARKETS - Dollar firm on U.S. optimism, stocks off highs

By Ian Chua

HONG KONG (Reuters) - Asian stocks pared early gains on Monday, pausing after their recent rally, while the dollar held firm as strong U.S. retail sales data prompted investors to trim bets of further U.S. interest rate cut.

The upbeat U.S. report had underpinned base metals prices, while mounting tension between Turkey and northern Iraq helped keep U.S. crude within striking distance of a record high of $84.05 set on Friday.

Concern that rising energy prices will stoke inflation drove gold back towards its recent 28-year high of $753.60.

At 0224 GMT, MSCI's measure of Asia Pacific stocks excluding Japan had edged up 0.2 percent, while Tokyo's Nikkei average was up about 0.3 percent.

Last week, the MSCI index posted its eighth straight weekly gain and set four record-closing highs in the last five sessions.

Analysts warned that further substantial upside may be limited, given concerns that Asian stocks may have risen too much too fast over the last few weeks.

"We're probably due for a correction at some point. The higher it gets, the more tempting it will get to take profits," said Eric Betts, equities strategist at Nomura Australia.

Still, the upbeat U.S. retail sales report has helped soothe worries about the health of the U.S. economy for now.