// By Jack Reerink
SINGAPORE, March 31 - Asian stocks fell and the dollar ticked lower on Monday morning, dragged down by the increasing likelihood of a drawn-out war in Iraq.
Gold and U.S. Treasuries, seen as safe-haven investments in uncertain times, inched higher. Oil rose one percent from its Friday close in New York, when it fell slightly on assurances by oil producing countries that supplies are enough to meet demand.
Stocks and the U.S. dollar have been drifting lower as tough Iraqi resistance, overextended U.S. supply lines and sand storms wipe out expectations of a quick victory by the U.S.-led forces.
The weekend's news from the battlefield -- U.S. troops digging in south of Baghdad for a prolonged campaign and taking casualties from suicide attacks -- heralded more declines.
"The troops seem to have some trouble in securing enough food and other supplies and American media are reporting that they are unlikely to attack Baghdad soon," a dealer at a Japanese bank said on Monday. "The market is perhaps expecting the war to continue for about a month from now."
Most stock markets worldwide were poised to close the quarter with mild losses -- but those numbers belie the period's gyrations.
Uncertainty over a possible U.S. invasion of Iraq pummelled U.S. stocks to near five-year lows and shoved the Nikkei to levels unseen since the early 1980s in early March. When war appeared all but unavoidable, markets rebounded and the Dow racked up its biggest gain in 20 years.
EUPHORIA TO PESSIMISM
Most markets hit multi-month highs on March 21, returning into the positive for the year. Stocks retreated last week as reports of Iraqi resistance and pictures of dead U.S. soldiers brought home the message that the war would be bloodier and longer than many investors expected.
"The market has swung from euphoria to pessimism to uncertainty," said Lynn Reaser, senior market strategist at Banc of America Capital Management in St. Louis.
By the same token, oil prices hit their highest levels since the previous Gulf war in February on fears the war could disrupt Middle East supplies. Crude then plummeted 25 percent in one week to hit a three-month low on March 21. It has gained 15 percent since and now is roughly unchanged for the quarter.
The dollar tells a similar story. It hit a seven-month low against the yen in early March but is off just one percent for the quarter against the Japanese currency.
NIKKEI, GREENBACK DOWN
Japan's benchmark Nikkei stock average opened down one percent on Monday morning. The blue-chip index ended up one percent last week as it raced to catch up with gains in overseas markets the previous week.
South Korean stocks fell 1.5 percent and Australian shares dropped 0.5 percent.
The dollar lost ground against the yen, falling to 119.90 from 119.78 yen.
The euro was almost unchanged from its Friday close at $1.0785, near a two-week high of $1.0801. The European currency gained about 2.5 percent last week to end at $1.0778.
U.S. light crude, which eased 21 cents to $30.16 a barrel on Friday, rose 23 cents to $30.39.
Gold rose to $333 an ounce after closing on Friday at $331.60, up 1.8 percent on the week.
Yields on benchmark U.S. 10-year Treasuries fell to 3.87 percent from 3.90 percent on Friday, after falling 20 basis points last week.
The Dow Jones Industrial Average lost 4.4 percent for the week and the broad Standard & Poor's 500 index fell 3.6 percent.
In Europe, the FTSE Eurotop 300 index of pan-European blue chips ended at 813.61, down five percent last week.