Asian stocks at 4 month high

By Rafael Nam

HONG KONG (Reuters) - Asian shares hit a new four-month high on 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 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.

"In the short run, you might say it's good for resources, but what I'd suggest is that the very high prices are, in fact, steadily and very meaningfully eroding demand," said Angus Gluskie, portfolio manager at White Funds Management in Sydney.

"Ultimately, that's not going to provide a pretty picture."

The MSCI broad measure of Asian stocks outside Japan .MIAPJ0000PUS rose 0.5 percent by 3:03 a.m. British time, after earlier hitting its highest level since mid-January. However, that is still down about 5 percent down for the year.

The index breached the key psychological 500-point level on Friday, extending a recovery since mid-March on hopes the worst of the credit crisis has passed and that earnings in Asia will prove more resilient than expected.

Gains in Asian stocks on Monday were driven in large part by resource firms such as Sydney-listed Woodside Petroleum Ltd (WPL.AX), though the overall advances were moderate.