The Australian dollar and commodity prices slid on Monday following an interest rate hike by China's central bank over the Christmas weekend, but volumes were light due to holidays in the final week of 2010.

Asia shares also tended lower in modest trade, with the MSCI index of Asian stocks outside Japan trading 0.12 percent down, dragged by a 0.3 percent drop in South Korea's KOSPI. Other major markets such as Hong Kong and Australia remained closed for the holidays.

On Saturday, the People's Bank of China raised rates by 25 basis points, the second rate rise in just over two months, part of a series of measures designed to combat inflation which hit a 28-month high of 5.1 percent in November.

China's move was a "fitting end to the year and great prelude for 2011 given the wide span of financial reforms expected in China," said Geoff Howie, sales and markets strategist at MF Global in Singapore.

"Expect Asian markets to be tempered into the last trading week of the year. The cautious tone and lower turnover this month compel the case for further consolidation," said Howe.

The Australian dollar slipped in early trading on expectations that more tightening by China could prompt investors to sell the Aussie after the year-end break. The currency was down 0.1 percent in thin trade with many key centers in the region, including Sydney and Hong Kong, on holiday.

Crude oil futures fell, easing towards $91 a barrel while U.S. wheat futures slid 0.7 percent, falling from a 4-1/2 month top, while soybeans and corn also lost ground.

But losses in the grain markets were limited by bullish fundamentals of tightening supplies and strong global demand.

Spot gold eased 0.4 percent.

China's key stock index was trading 0.5 percent higher with banking and insurance shares rising on expectations that higher benchmark rates will support their earnings. Japan's Nikkei rose 0.5 percent, extending its recent over performance versus other Asian markets. The Nikkei is up about 10 percent since then versus a 2.7 percent rise for the MSCI Asia ex-Japan index.

S&P futures fell 0.4 percent.