TOKYO (Reuters) - Asian stocks eked out gains on Monday after seeing Wall Street recover from the latest round of tensions in the Ukrainian crisis, although renewed uncertainty over the volatile conflict put a firm lid on markets.
The dollar was on the back foot against the safe-haven yen, weighed by a slide in Treasury yields.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 percent.
Tokyo’s Nikkei gained 0.1 percent.
News late on Friday that Ukrainian forces said they had destroyed a Russian military column in Ukrainian territory initially hit Wall Street, drove down government bond yields and boosted safe-haven currencies such as the yen and Swiss franc.
U.S. stocks eventually pared their losses as risk appetite partially returned, giving Asian shares an early lift on Monday.
Still, with the four-month conflict reaching a critical phase over the weekend - Kiev and Western governments are nervously watching if Russia will intervene in support of the increasingly besieged rebels in eastern Ukraine- risk appetite was subdued.
“A feeling of complacency had been creeping back into investor psychology last week with a general feeling that perhaps the declines at the start of the month were overdone,” Jasper Lawler, market analyst at CMC Markets, said in a note to clients.
“The encounter in Ukraine was a hefty reminder that geopolitics cannot be ignored,” he said.
The dollar dipped slightly to 102.33 yen after sliding from a 10-day peak of 102.72 on Friday.
The euro was also flat, at $1.3395 having being lifted from an intraday low of $1.3359 on Friday as the greenback was hit by a sharp fall in Treasury yields.
The benchmark 10-year Treasury yield dropped to as low as 2.30 percent on Friday, lowest since June 2013, in wake of the Ukraine news. It yielded 2.360 percent on Monday.
Apart from geopolitics, currency and bond markets will be focused on the Aug. 21-23 annual meeting of top central bankers at Jackson Hole, Wyoming, for possible clues about the path for monetary policy in the months ahead.
“Historically, trading leading into Jackson Hole sees increased volatility,” noted Evan Lucas, strategist at IG in Melbourne.
“Talk so far is that chairperson Yellen is concentrating on employment and the composition of wage growth and full-time versus part-time percentages; this issue is likely to be echoed by central bankers around the world as global employment remains soft at best.”
In commodities, Brent crude oil slipped but kept the gains made on Friday when it jumped more than $1.50 on the Ukraine news. Brent crude was down 65 cents at $102.88 a barrel. [O/R]
Additional reporting by Ian Chua in Sydney