Asia stocks climb on lower oil and stronger dollar

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks rose on Monday and the dollar hit a six-month high against the euro as oil briefly slipped below $115 a barrel and a view that the U.S. dollar's long-term decline is nearing an end gained ground.

Government bond prices also climbed, suggesting the rally in equities thinly covered darker fears that the impact of the U.S. economic slowdown on the rest of the world may have been underestimated.

Popular trades such as betting against the dollar and financial sector shares while speculating on a rise in oil prices were slashed last week. On Friday the euro recorded its largest single-day decline against the dollar in 7-1/2 years.

However, the key remained the direction of oil prices.

"The dollar has been strengthening due to a deterioration in economic data outside of the U.S. coupled with low oil prices," said Ashley Davies, currency strategist with UBS in Singapore.

"If oil were to start creeping higher again in the absence of clear fundamentals, it would raise the risk of a partial reversal of recent moves," he said in a note.

The euro fell to a six-month low at $1.4908 before recovering slightly to around $1.4965 by 3:30 a.m. British time. It has plunged around 6 cents in the last week.

The dollar eased back to around 109.90 yen having hit a seven-month high around 110.40 earlier.