/www.fxserver.com/ By Raju Gopalakrishnan
The dollar rose to a three-week high against the yen in Asian trade on Monday and the Tokyo stock market gained more than one percent, although much of the region was on holiday for Chinese New Year.
The dollar reached about 120.30 yen on reports that policy dove Nobuyuki Nakahara would be chosen as the new Bank of Japan governor. Nakahara has advocated aggressive credit easing by the central bank, promoting a weaker yen.
Oil prices slipped slightly after Saudi Arabia said it would try to ensure OPEC fulfils a new output ceiling. Spot gold was last quoted at $369.50 per ounce, little changed from Friday's close.
Markets were closed in China, Hong Kong, Singapore, Malaysia and Taiwan for Chinese New Year.
In Tokyo, Japanese stocks opened subdued but ticked up in a technical rebound by midsession. At the break, the Nikkei was 1.23 percent higher at 8,442.85 points.
"It's not easy to find a direction now," said Satoshi Hayashi, general manager of investment research at Meiko National Securities.
"People are basically waiting for the main events from the U.S.," he said, referring to Secretary of State Colin Powell's presentation to the U.N. Security Council on Wednesday.
Washington has said Powell would prove Iraq's concealment of weapons of mass destruction and links with al Qaeda. But markets were expecting few major developments before then, although the threat of war had in no way receded.
Analysts said the destruction of the space shuttle Columbia was unlikely to have much of an impact on Wall Street and that that had helped sentiment somewhat.
"People were not sure how to assess the incident. But now that Globex (Nasdaq futures) showed a strong footing, we can say that Wall Street will take it in its stride," said Kazunori Jinnai, general manager at Daiwa Securities SMBC's equity department.
In Australia, the benchmark S&P/ASX 200 index eased 1.8 points to 2,955.1 by midday.
"Despite the overtones of war, there's economic data to wait for both here and in the United States this week... If that looks pretty good, you could get a bit of buying, because you'd have to start thinking a war is priced-in," said James Hogan, dealer at Sagitta Wealth Management.
The United States was due to announce manufacturing data later on Monday and key jobs data on Friday.
On the energy market, front-month March crude stood at $33.36 per barrel at 0110 GMT, down 15 cents from Friday's close in New York, where the contract fell 34 cents to settle at $33.51.
But volumes were thin, and traders said comments by President Bush on Friday that Washington may accept a new U.N. resolution on Iraq had helped ease prices.
"After Bush's comment, the timing of a military confrontation with Iraq does not seem as immediate as it once was, and that has put a cap on any possible upward price movement," a Tokyo-based broker said.