* MSCI Asia-Pacific index down 0.2 pct, Nikkei up 0.1 pct
* Little response to N.Korea missile launch, record high for
* Dollar index holds gains after rising on upbeat US GDP
* Oil's recovery sputters out, gold near multi-week high
By Shinichi Saoshiro
TOKYO, May 29 Asian stocks handed back earlier
modest gains and drifted lower on Monday, running short of
incentives to push past two-year highs with many key markets
closed for holidays.
The pound, meanwhile, nursed losses after a poll showed a
shrinking lead for Prime Minister Theresa May's party in
Britain's upcoming elections.
MSCI's broadest index of Asia-Pacific shares outside Japan
was down 0.2 percent. Taking cues after the S&P
500 and Nasdaq scraped to record closing highs,
it had earlier risen towards a two-year peak marked on Thursday.
Japan's Nikkei edged up 0.1 percent while weaker
commodities pushed down Australian shares 0.5 percent.
The closure of Chinese, British and U.S. markets on Monday
deprived investors of potential catalysts and kept overall
Brushing aside a North Korean missile launch, South Korea's
KOSPI initially touched an intraday record high before
pulling back 0.1 percent. It was on track to snap a six-day
Pyongyang fired what appeared to be a short-range ballistic
missile early on Monday.
The dollar index against a basket of major currencies was
steady at 97.465 after rising on Friday thanks to upbeat
U.S. gross domestic product data.
The index fell to a 6-1/2-month low below 97.00 a week ago
on U.S. political concerns centred on President Donald Trump,
but have since crept back.
The dollar and U.S. stocks would face downward risks if
trouble for the Trump administration becomes a long-term
concern, said Masafumi Yamamoto, chief forex strategist at
"That said, the possibility of the president actually being
impeached remains very low, and any negative pressure on U.S.
stocks has been limited so far."
The greenback was steady at 111.290 yen, with the
safe-haven Japanese currency showing little reaction to North
Korea's missile launch.
"While the North Korean situation remains tense, the market
has gotten used to missile launches, with broader volatility
also declining," said Shusuke Yamada, senior strategist at Bank
of America Merrill Lynch in Tokyo.
"The U.S. markets will also be shut today, and that is
curbing incentive and restricting overall movements as well."
The pound was a shade higher at $1.2828 after
dropping more than 1 percent on Friday to as low as $1.2775.
Sterling suffered its steepest fall since January on Friday
after an opinion poll showed the governing Conservatives' lead
over the Labour opposition down to just 5 percentage points with
less than two weeks before a general election.
The euro declined 0.1 percent to $1.1165. The common
currency had soared to a 6-1/2-month high of $1.1268 last week
on factors including relief at the French presidential election
outcome, but it has failed to make further headway.
South Africa's rand was turbulent after reports President
Jacob Zuma defeated a no-confidence motion against him.
The rand went to a two-month high of 12.65 per dollar
before pulling back to 12.85.
Crude oil prices slipped, their modest recovery from
disappointment over last week's OPEC meeting sputtering out on
the back of a relentless rise in U.S. drilling.
Oil suffered a big drop last week after an OPEC-led decision
to extend production curbs did not go as far as many investors
U.S. crude was down 0.2 percent at $49.63 a barrel,
having slumped to as low as $48.18 on Friday. Brent fell 0.3
percent to $49.63 a barrel.
Spot gold hovered close to a near four-week high of
$1,269.50 an ounce hit on Friday, led higher by investors who
feared political risks.
(Reporting by Shinichi Saoshiro; Editing by Kim Coghill & Shri