The dollar ended Asian trading on the high side of 105 yen after rising to a morning high of 106.24. At 0800 GMT, the dollar was around 105.90 yen in European trading versus 105.68/76 in New York late on Friday. Taiwan stocks closed up 1.6 per cent on Wall Street's gains and short-covering after investors sensed negative impact from the island's latest earthquake on Friday would be limited.

But worries about Daewoo Group's debt shaved 2.5 per cent off Seoul stocks.

Australia's benchmark All Ordinaries Index ended up 0.6 per cent at 2,855.4 on the back of the US rally, but the response was muted as investors appeared to lack faith in the US trend.

Tokyo's benchmark Nikkei 225 index closed 1.2 per cent higher at 17,649, helped by hopes for more liquidity ahead of the launch of new trust funds the market has been expecting to be set up toward the end of the week.

Hong Kong's Hang Seng closed up 1.33 percent.

South Korea's main index fell 2.5 percent as speculation about how much of the Daewoo Group's debts would have to be written off spooked investors, brokers said.

Some said the Nikkei's gains were capped by worries ahead of US economic indicators due later in the week.

"We'll have to see how Wall Street responds to US data coming out this week," said one trader in Tokyo. "There may be some volatility ahead, depending on the figures."

On Thursday, the US commerce department is due to issue its estimate of advance third-quarter gross domestic product and the labor department will release third-quarter employment cost index figures.

The Dow Jones industrial average gained 1.7 per cent to end at 10,470.25 following news of a historic banking deal that may accelerate mergers in the US financial services industry.

Manila stocks fell 1.35 per cent to an eight-month low due to worries over rising domestic interest rates and prospects of weak corporate earnings in the third quarter.

"It is because of interest rate worries," said Mayenne Katimbang, research head at Magnum International Securities Inc.

Singapore's Straits Times Index ended flat at 2,022.36 while the benchmark Malaysian share index finished 0.19 per cent higher at 740.41 points amid expectations of a pro-business federal budget.

Jakarta stocks closed down 1.18 per cent, falling below the key 600-mark amid apparent worries about the cabinet to be picked this week by new President Abdurrahman Wahid.

"The market concerns lie in the possibility of some old faces from the old regime in the new cabinet," said David Chang, the head of research at Jakarta's Trimegah Securities.

Thai markets were closed for a public holiday and will reopen on Tuesday.

The NYMEX December crude oil futures were up 35 cents per barrel at $23.80 by 0830 GMT.

Gold was barely hovering above US$300 and dealers said the price could test below the level in a correction from the steep rise in recent weeks.