TOKYO Asian shares inched up on Monday on hopes that Greece can avoid a near-term bankruptcy, with the market focusing on a euro zone finance ministers meeting later in the day, but a regional Spanish vote favouring separatist parties capped gains.
It was the sixth day in a row of advances for MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS and comes after the euro and global shares climbed on Friday on expectations that an agreement will be reached soon to disburse aid for Greece, and on a rise in Germany's Ifo business climate index.
"There is optimism around in regards to the euro area's ability to achieve a deal on Greece," said Emma Lawson, senior currency strategist at the National Australia Bank.
But worries about the Spanish vote and the implications for Madrid's push for fiscal austerity, helped the euro slip 0.2 percent to $1.2954, pulling back from a three-week high of $1.2991 reached on Friday.
Against the yen, however, which has been weakening on expectations of further monetary policy easing with the likely advent of a new Japan government, the single currency hit a seven-month peak of 107.13.
The dollar .DXY inched up 0.1 percent, after falling to a three-week low of 80.128 against a basket of major currencies on Friday as risk appetite gained.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1 percent after earlier rising to a two-week high. The index ended its best week in more than two months with a 2.5 percent gain on Friday.
Australian shares rose 0.2 percent on gains in energy and mining stocks, but South Korean shares .KS11 gave up earlier gains to fall 0.2 percent. Hong Kong .HSI and Shanghai .SSEC shares also eased.
Japan's Nikkei stock average .N225 gained 0.7 percent after rising to a seven-month high earlier in the day. Japanese financial markets were closed on Friday for a public holiday..T
"Although some investors are cautious about the fast-paced gains in the Japanese market, they will likely stay buyers on the back of the improving trading environment in the global market," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Asset returns in 2012: link.reuters.com/nyw85s
German IFO and GDP growth: link.reuters.com/bum65s
Gold above key moving averages: r.reuters.com/rez24t
Commodity prices: link.reuters.com/xyx96s
EUROPE HOLDS KEY
On Sunday, separatists in the Spanish region of Catalonia won an election but failed to get the resounding mandate they need to push convincingly for a referendum on independence.
The win heightens concerns about a potential negative impact on the Spanish economy and the country's finances, as Catalonia accounts for 20 percent of the economy and provides the most tax revenue to the central government.
"While the result helps tone down the risk of the government being forced to give more autonomy to Catalonia in its fiscal policy, the underlying discomfort the province may be feeling about its big fiscal burden may persist," said Masafumi Yamamoto, chief FX strategist at Barclays in Tokyo.
He added that the result may weigh on the euro more when trading starts in Europe, where the euro's liquidity is far larger.
On Friday, European shares posted their best weekly gain so far this year after rising for a fifth day on hopes for Greece and Germany's Ifo data, while U.S. stocks also rose for a fifth day in light volume after Thursday's U.S. Thanksgiving holiday.
The Ifo report followed firmer manufacturing data from China and the United States released earlier last week.
The Thomson Reuters-Jefferies CRB index .TRJCRB, a global commodities benchmark, rose to its highest close since October 23 on Friday -- its best weekly performance since mid-September with a 1.9 percent gain.
Spot gold fell 0.3 percent to $1,748.07 an ounce on Monday after rising above $1,750 for the first time in five weeks on Friday. <GOL/>
U.S. crude fell 0.4 percent to $87.93 a barrel and Brent eased 0.2 percent to $111.17.
Firm stock markets helped steady Asian credit markets, and the spreads on the iTraxx Asia ex-Japan investment-grade index barely moved from Friday levels.
(Additional reporting by Ayai Tomisawa in Tokyo and Ian Chua in Sydney; Editing by Edwina Gibbs)