HONG KONG — Asian stocks climbed on Monday following modest gains on Wall Street while the franc tumbled against the euro and the dollar as some investors picked up bargains, though overall sentiment remained fragile after a wild week in financial markets.
Stocks in Australia and Japan rose more than 1 percent as main Wall Street indices advanced on Friday in light volumes, but without the wild intra-day swings that marked the first few days of trading last week after the U.S. credit rating was downgraded by Standard and Poor's.
The MSCI index of Asia Pacific stocks outside Japan rose 0.4 percent after tumbling nearly 4 percent last week.
Traders said the gains look sustainable for now, especially with U.S. stock futures up by 0.8 percent in Asia and after a short-selling ban on financial stocks in Europe last week.
But markets remain vulnerable to declines as debt cutting plans in Europe and the United States threaten to act as a further drag on already weak economic growth.
Early signs that equities might have marked a temporary bottom after last week's volatile moves and persistent chatter that Swiss authorities may peg the franc against the euro to battle its surge sent the safe-haven currency tumbling by two percent against the euro and the dollar.
The euro, which plumbed a record low around 1.0075 francs last week, climbed to a high of 1.1294 francs in morning trade, up from 1.1079 late in New York on Friday.
But Barclays Capital analysts warned expectations of a peg seemed overdone, believing the franc would rally once again this week if markets started to change their view on its probability.
"We remain CHF bears in the medium run - we agree with the SNB's view that it is "massively overvalued" - but, this week, we are not expecting the recent appreciation of EUR/CHF to hold," said Paul Robinson, strategist at Barclays Capital.
The drop in the franc rippled over into gold markets with the precious metal slipping after a 1.5 percent slide in the previous session. Before Friday's slide, gold had gained 9 percent so far this month.
U.S. crude futures were steady around $85.50 a barrel after settling down slightly on Friday.
Trading activity is expected to be thin with Korea and India out and Japan's summer "obon" holidays this week.
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