* MSCI Asia ex-Japan up 0.1 pct
* Japanese financial markets closed for public holiday
* Dollar up vs yen, hovers near 20-month high
* Oil falls as "fiscal cliff" disarray raises demand
* European shares likely subdued
By Chikako Mogi
TOKYO, Dec 24 Asian shares steadied in quiet
pre-holiday trade on Monday from a slump late last week, with
prices capped by nervousness about the risk of the United States
failing to avert a fiscal crisis.
European shares will likely be subdued, with financial
spreadbetters predicting London's FTSE 100 and Paris's
CAC-40 to open steady to 0.1 percent higher.
Activity in other assets was also subdued, with spot gold
steadying as investors took to the sidelines, while oil
extended losses, with U.S. crude inching down 0.2 percent
to remain below $89 a barrel while Brent futures eased
0.3 percent to $108.70.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.1 percent after falling to a near
two-week low on Friday when House of Representatives Speak John
Boehner failed to gain support for a tax plan, raising fears the
U.S. may not be able to avert the "fiscal cliff" of automatic
spending cuts and tax increases set to start Jan. 1.
The White House on Friday tried to rescue stalled talks but
there was little headway as lawmakers and President Barack Obama
abandoned Washington for Christmas.
Many market players still expect both sides to reach a
compromise before the year-end deadline but heightening tensions
were likely to stifle trade already slowed by the holidays.
"It's all about the U.S. fiscal cliff issue," said Victor
Shum, managing director at IHS Purvin & Gertz. "The chances are
that we will get a deal between the White House and the
Republicans, but the fact that Boehner failed to get members to
support his plan is worrying."
Australian shares advanced 0.25 percent in a
shortened session before the Christmas break, lifted by blue
chips, but trade was extremely thin with many players already
The Hang Seng Index closed up 0.2 percent, with Hong
Kong financial markets shut at midday for the Christmas holiday
and resuming trading on Thursday. Shanghai shares
outperformed their peers with a 0.5 percent rise on expectations
for more public funds' allocations.
South Korean shares edged up 0.1 percent in light
trading before Christmas Day, with the weakening Japanese yen
and U.S. fiscal uncertainty keeping investors uneasy.
Japanese financial markets are closed for a public holiday
and will resume trading on Tuesday.
The dollar inched up 0.2 percent to 84.35 yen, having
fallen below 84 yen on Friday. The dollar hit a 20-month high of
84.62 yen on Dec. 19.
The yen has been pressured by expectations the Bank of Japan
will be compelled to adopt more drastic monetary stimulus
measures next year as incoming prime minister Shinzo Abe
demands action by the central bank to bring Japan out of
Abe stepped up pressure over the weekend, saying on Japanese
television that he will try to reform a law guaranteeing the
BOJ's independence if his demand for a binding inflation target
is not met.
Currency speculators increased their bets against the U.S.
dollar in the latest week, according to data from the Commodity
Futures Trading Commission released on Friday. Bets against the
yen fell after reaching a more than five-year peak.
But market players generally see the dollar staying firm for
now as the U.S. fiscal impasse will likely continue to sap
investor appetite for risky assets and raise the dollar's
"It looks like all momentum for the fiscal cliff
negotiations is gone," said Rob Ryan, strategist for RBS in
Singapore. While the dollar could be swayed by year-end flows,
"on balance I would see a stronger U.S. dollar into the end of
the year," Ryan said.
EPFR Global, a fund-tracking firm, said on Friday that
investors around the world pulled $4.1 billion from bond funds
worldwide during the week ending Dec. 19, the most since August
2011, and favoured riskier exchange-traded funds despite the
U.S. budget tussle.
ETFs are generally believed to represent the behavior of
institutional investors, and can be used opportunistically to
bet on various indexes.
EURO ZONE SET TO FOCUS ON ITALY
Focus for the euro zone next year will turn to Italy, where
Mario Monti announced on Sunday, two days after his resignation,
that he would consider seeking a second term as Italian prime
minister if approached by allies committed to backing his
austere brand of reforms.
Stakes will be high at a parliamentary election set for Feb.
24-25, as the world's eighth largest economy suffers from
recession and public debt exceeding $2.6 billion, have
aggravated investor concerns about growth and stability in the
Italy faces a huge bond redemption in the first quarter of
2013 and a failure to secure funding could refuel concerns about
sovereign financing not only in Italy but also
similarly-indebted Spain, battering confidence in the euro.