* MSCI Asia Pacific ex-Japan down 0.2 pct
* Dollar hits record low vs yen in early Asia
By Chikako Mogi
TOKYO, Oct 31 Asian shares fell on Monday,
taking a breather from a nearly 10 percent rally last week after
Europe laid out a basic framework to tackle its debt crisis, but
the euro held steady while the dollar dropped to a record low
against the yen.
Investors were shifting their focus for now from Europe to
key events such as the Federal Reserve's monetary policy meeting
and U.S. economic data, including jobs, due later this week to
gauge the state of the world's largest economy.
Despite easing equity markets, investors' appetite for some
riskier assets remained, with Asian credit markets stabilising
and easing demand for protection in the options market against
The CBOE Volatility index VIX -- a 30-day risk
forecast of volatility in the S&P 500 -- fell on Friday to its
lowest in nearly two months.
MSCI's broadest index of Asia Pacific shares outside Japan
fell 0.2 percent on Monday, after posting its
best week in nearly three years as a long-awaited plan to
resolve the European debt crisis sparked a huge relief rally.
The Nikkei opened down 0.4 percent, weighed by the
yen's persistent strength and worries about Japanese companies'
"The Nikkei ended at a two-month closing high on Friday, so
it's difficult for the market to push it up too far, but it's
unlikely that there will be a sell-off, either," said Yumi
Nishimura, senior technical analyst at Daiwa Securities.
MSCI's all-country world stock index was up
0.5 percent late on Friday, after hitting its highest level in
nearly three months and posting its best week since July 2009.
U.S. stocks ended mixed on Friday, closing out a fourth week
of gains. October also was on track to be the best month for
stocks since 1974, supported by strong earnings. Merck & Co Inc
and Chevron Corp both topped expectations with
financial results on Friday.
But a weak sale of Italian bonds on Friday underscored
fragility of the euro zone's debt progress. The 10-year yield
gap between Italian and German bonds widened
after the auction to 378 basis points, about 10 bps wider on the
Italy paid record high cost of more than 6 percent to borrow
on the debt market, in the first euro zone bond auction after
policymakers struck an agreement on Thursday to slash Greece's
debt burden and strengthen the European Financial Stability
Facility, the region's rescue fund.
Details to implement the agreement remain unresolved, with
one of the key issues being raising funds for the bailout
The head of the EFSF played down hopes of a quick deal with
China to throw its support behind efforts to resolve the crisis.
But a rise in riskier assets helped ease strains and
stabilise Asian credit markets, with the spreads on the iTraxx
Asia ex-Japan investment grade index , a gauge for
whether investor risk appetite is returning, little changed
early on Monday.
The euro held on to most of last week's gains against
the dollar, but uncertainty about a possible interest rate cut
on Thursday by the European Central Bank could limit its upside
The single currency reached a seven-week high around $1.4247
last Thursday, and looked set to end the month up nearly 6
percent for its best monthly performance in just over a year.
The dollar briefly fell as low 75.31 yen on
electronic trading platform EBS in thin early Asian trade on