Asian stocks edged up Monday, supported by buying of defensive sectors, while the U.S. dollar rose on caution ahead of a Federal Reserve meeting this week when policymakers may extend programs to keep borrowing costs low.
Investors were also watching U.S. Treasury yields, which remained in a rising trend, ahead of a record $104 billion in government bond auctions this week to finance massive rescue spending on the economy.
Until markets gain a clearer picture of the Fed's intentions and its views on the nascent recovery, dealers would likely keep asset markets in narrow ranges, taking profits on small price rises.
The Australian dollar was one of the biggest movers on the day, falling 0.8 percent against the dollar and the yen , as metals prices fell on concern Chinese restocking could soon taper off. Oil fell towards $69 a barrel, extending the previous session's drop of more than 2 percent, as bearish sentiment over gasoline markets in the United States continued to dominate investors' concerns.
China's imports of refined copper hit a record in May, up from a previous record in April and 258 percent higher than a year earlier. However, speculation spread that the pace of demand was unsustainable, and copper for delivery in three months on the London Metal Exchange fell $159 to $4,866 a ton.
Attention is set to turn to this week's Federal Reserve interest rate meeting, starting on Tuesday. No rate change is expected though investors will be alert to any clues on how long
the Fed expects to keep rates low.
Japan's Nikkei 225 Average finished 0.4 percent higher, with brewer Sapporo Holdings and carmaker Nissan Motor > making robust gains, though caution about a possible correction in the market remained strong.
South Korea's KOSPI closed 1.1 percent higher helped by gains in some technology issues on earnings hopes and banks, but caution ahead of the U.S. Federal Reserve's interest rate meeting weighed on sentiment.
Australian shares gained half a percent, buoyed by resource stocks such as BHP Billiton and top bank National Australia Bank.
More From CNBC.com
Hong Kong's Hang Seng Index was up 0.7 percent, after opening flat, led by a 0.4 percent rise in China Mobile. Two initial public offerings -- a scrap-metal recycler and a furniture maker -- drew strong interest on their debuts in a market seeking fresh catalysts ahead of mid-year reports by fund managers.
Singapore's Straits Times Index fell 0.3 percent. Banks moved into positive territory, after Deutsche Bank raised its target prices for all three banks in the island-state, citing further improvement in net interest margins and signs of recovery in the residential property sector.
China's Shanghai Composite Index gained 0.6 percent. Financial shares led the advance with Bank of Nanjing up, while Bank of China also advanced.