HONG KONG: Escalating violence in the Middle East sent most Asian shares lower and oil prices higher on Monday while China's decision to tighten monetary policy further last week added to weak sentiment.
Traders also took the opportunity to cash in after recent rallies across the region.
Tokyo slipped 0.36 percent by the break, Hong Kong fell 0.28 percent and Sydney gave up 0.71 percent while Seoul was 0.28 percent lower.
However, Shanghai gained 0.46 percent despite the central bank's decision Friday to hike the amount of money lenders must keep in reserve, as it struggles to keep inflation under control.
Investors are growing more concerned about the crisis in the Arab world, where the son of Libya's leader warned of a "bloodbath" if the government's offer of reforms was not accepted by protesters while Bahrain has also been rocked by unrest.
The Middle East has been sent into upheaval in the wake of revolutions in Tunisia and Egypt, with Iran, Morocco and Yemen also seeing demonstrations.
"There is a bit of nervousness as violence in the Middle East and around is continuing to get worse and investors are just starting to get worried about that side of the world," Hamilton Hindin Greene broker Grant Williamson told Dow Jones Newswires in New Zealand.
The deadliest confrontations were in Libya, where Human Rights Watch said it feared a catastrophe with at least 173 people dead after a brutal crackdown on demonstrators demanding an end to Moamer Kadhafi's 41-year rule.
His son Saif al-Islam Kadhafi offered reforms but said the country would be destroyed by civil war if protests topple the leadership.
The regional troubles sent oil higher in Asian trade on Monday due to worries about possible supply problems.
Brent North Sea crude for April delivery soared $1.02 to $103.54 per barrel, and New York's main contract, light sweet crude for delivery in March, gained $1.13 to $87.33.
"Both benchmarks have really zoomed ahead this morning. The main driver is really the unrest in the Middle East," said Victor Shum, senior principal for Purvin and Gertz energy consultants in Singapore.
Some investors were wary after the Chinese central bank's move to hike the reserve requirement ratio for the second time this year -- and two weeks after it raised interest rates.
The announcement on Friday evening raised concerns that China's economy could slow down substantially, leading to weaker exports for many of its trading partners.
Despite the news Shanghai stocks were led higher by resource companies due to higher energy prices.
Talk of a possible rate hike by the European Central Bank supported the euro, which surged over the weekend.
The single currency fetched $1.3695 in Tokyo morning trade, compared with $1.3691 in New York late Friday.
It also traded at 113.83 yen against 113.92 in New York, after rising briefly in Asia to 113.97 yen, the highest since January 27.
The dollar changed hands at 83.12 yen, virtually flat from New York.
Investors showed little reaction to a G20 meeting in Paris, where finance ministers agreed on which economic indicators to use to evaluate and tackle the imbalances at the heart of the global crisis.
Gold opened at $1,395.80-$1,396.80 an ounce in Hong Kong, up from Friday's close of $1,386.00-$1,387.00.
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