Asian Markets Advance, Japan Hits 4-Month High

Asian markets hit a new four-month high Monday as a relentless rise in oil prices bolstered resource shares, but wariness about inflation and doubts about the U.S. economy kept gains in check.

The U.S. dollar was range-bound after its drop on Friday when data showing a plunge in U.S. consumer confidence to a 28-year low raised doubts about when the U.S. Federal Reserve will raise interest rates in the world's largest economy.

Asian shares have rebounded 20 percent since hitting the year's low in mid-March, but record oil prices continue to worry, despite the benefit to resource firms, given the prospects of inflation at a time of slowing global economic growth.

Concerns over tight fuel supplies led oil prices higher, with U.S. light crude for June delivery up 33 cents at $126.62 a barrel, near the record $127.82 hit on Friday. Oil prices have risen six-fold since 2002 and doubled since last year as strong demand from China and other developing nations comes amid tightening production capacity.

Tokyo's Nikkei 225 Average rose 0.4 percent to hit a four-month closing high as near record-high oil prices boosted Inpex Holdings, while higher commodity prices also pushed up trading firms such as Mitsubishi Corp.

South Korea's KOSPI closed 0.2 percent lower led by technology issues such as Samsung Electronics after gains
last week that lifted the KOSPI to a new 2008 peak, with record oil prices pressuring stocks.

Australian shares rose 0.3 percent to post their fourth straight session of gains, led by resource firms such as Woodside Petroleum and BHP Billiton on strong oil and metals prices. But Insurance Australia Group fell as much 6.8 percent, its biggest one-day fall in over two months, on worries it may reject an improved takeover bid from larger rival QBE Insurance Group, causing the deal to fall through.

Hong Kong stocks were higher led by coal producer China Shenhua amid high coal prices, while investors also focused on shares of building material companies after China's devastating earthquake. Construction-related firms are expected to boost capacity to aid a massive reconstruction effort in China after the earthquake damaged buildings across Sichuan province. Shares of Anhui Conch Cement added 4.7 percent after the top Chinese cement producer said it planned to speed up capacity expansion in the aftermath of the quake.

China's Shanghai Composite Index slipped 0.5 percent in light trade, pressured by lingering concerns about the economic impact of last week's devastating earthquake although shares of firms that might benefit from reconstruction efforts outperformed. The official China Securities Journal quoted several economists as saying that economic losses from the quake were likely to exceed losses from severe snowstorms that ravaged large areas of southern China early this year, and could reduce China's GDP growth this year by 0.4 to 0.7 percentage point. China's largest property developer, China Vanke fell. Pharmaceutical and cement shares surged, with Southwest Pharmaceutical soaring its 10 percent daily limit to 14.81 yuan. The stock has
gained 33 percent since May 9, the last full session before the earthquake.

Markets in Malaysia, Singapore and Thailand are closed for the Vesak Day holiday. They will reopen Tuesday.

© 2009 CNBC.com