HONG KONG: Japanese stocks extended their recent rally Monday as the dollar consolidated gains against the yen, with investors betting on a US interest rate rise next month.
However, other markets continued to struggle due to uncertainty over the impact of a Donald Trump presidency.
The greenback has soared to near six-month highs against the yen since Trump's election win on a platform of huge infrastructure spending and tax cuts. Experts say this will fan inflation and force the Federal Reserve to raise rates.
The dollar's rise has been a boon for Japan's exporters as it makes their goods cheaper overseas and boosts repatriated profits.
The dollar hit 111.12 yen at one point in Japan, levels not seen since the end of May, while the Nikkei stock index climbed 0.8 percent to its highest level since January.
"The trend for yen weakness will continue amid a very violent and volatile market next year," said Shusuke Yamada, chief Japan foreign exchange and equity strategist at Bank of America Merrill Lynch in Tokyo.
However, Chris Weston, chief market strategist in Melbourne at IG Ltd, told Bloomberg News: "We have seen some monster moves over the past two weeks on Fed expectations, and I think that can't go on for much longer.
"I wouldn't be surprised to see a little bit of pause as investors take a break to catch their breath, and these Asian markets may take a little breather as well and see some consolidation, whether it's been falling or rallying."
Most regional markets retreated on concerns that the Fed would raise rates faster next year than previously thought.
Hong Kong fell 0.1 percent in late trade and Shanghai ended 0.8 percent higher.
Sydney eased 0.2 percent and Seoul was 0.4 percent off.
Among emerging-market bourses Manila lost 1.6 percent and Jakarta fell 0.4 percent, hit by foreign cash outflows as dealers head to the United States looking for better and safer returns.
Singapore dipped 0.4 percent and Wellington gave up 0.1 percent.
Oil prices built on Friday's gains, with both main contracts rising more than one percent, after Russia and Iran expressed optimism a deal can be agreed between OPEC and other major producers on cutting output.
Jeffrey Halley, senior market analyst at OANDA, said: "As we enter the final lap of a tortuous OPEC process, with (the group's twice-yearly meeting on) 30th November finally in sight, expect oil prices to be driven by whatever comments, unofficial or official, are coming from them and Russia."
- Key figures around 0700 GMT -
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Tokyo - Nikkei 225: UP 0.8 percent at 18,106.02 (close)
Hong Kong - Hang Seng: DOWN 0.1 percent at 22,315.33
Shanghai - Composite: UP 0.8 percent at 3,218.15 (close)
Euro/dollar: UP at $1.0607 from $1.0592 Friday
Dollar/yen: UP at 111.00 yen from 110.90 yen
Pound/dollar: DOWN at $1.2339 from $1.2353
Oil - West Texas Intermediate: UP 53 cents at $46.22 per barrel
Oil - Brent North Sea: UP 58 cents at $47.44
New York - Dow: DOWN 0.2 percent at 18,867.93 (close)
London - FTSE 100: DOWN 0.3 percent at 6,775.77 points (close)
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