Asian markets were mostly higher on Monday, with Hong Kong marking a 21-month high and Japan's Nikkei climbing above 11,000 points for the first time since April 2010.
In the currency market, South Korea's won was the sharpest mover, falling against the U.S. dollar as foreign investors sold South Korean stocks, while North Korea's latest threat to take "high-profile measures" suggested that South Korea's northern neighbor is considering a third nuclear test.
"The market is getting a little twitchy about the geopolitical risk (in Korea)," said Paul Mackel, head of Asian currency research at HSBC in Hong Kong.
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The U.S. dollar was recently at 1,081.68, compared with 1,074.50 late Friday.
The move in the dollar against the yen "continues to unfold as a powerful force, though we think that much of the policy change should already be in the price at these levels," said HSBC's Mr. Mackel.
The U.S. dollar was a touch higher against the yen on Monday, at �91.03 compared with �90.87 late Friday in New York. A weakening yen has been a key contributor to the recent rally in Japanese stocks, and despite some renewed strength in the currency early last week�brought about by dollar selling after the Bank of Japan concluded its policy meeting�the greenback still managed to post a 0.9% gain last week.
The dollar's 0.6% gain against the yen on Friday gave Japanese stocks a healthy start to the session, with the Nikkei breaching the 11,000 mark in early trading, before profit-taking sent the index into negative territory. The Nikkei fell 0.6% to 10,863.84.
The Japanese market was gearing itself for the core of its earnings season, with a string of local corporations scheduled to report this week. On Wednesday, Canon Corp. and Sumitomo Mitsui Financial Group will announce their results. They will be followed by Softbank Corp., Toshiba Corp. and Nomura Holdings among others on Thursday.
On Monday, there were a number of large movements in Tokyo in response to earnings news. Industrial robotics manufacturer Fanuc Corp. dropped 5.2% after revising down its full-year outlook; Advantest lost 4.2% after a Nikkei report over the weekend said that there could be a possible decline in full year earnings, and Hitachi High-Technologies sank 10.6% after its third quarter results suggest that it will likely miss expectations for the fiscal year.
Hong Kong's Hang Seng Index was up 0.5% at 23688.65, after touching a 21-month high of 23713.40 earlier in the session.
In mainland China, The Shanghai Composite was 1.6% higher, with banks and cement companies performing well.
South Korea's Kospi fell 0.3%, with heavy foreign selling putting a number of large local stocks under pressure: Samsung Electronics dropped 2.6% and Hyundai Motor lost 1.5%.
Markets in Australia were closed for a public holiday.
Write to Daniel Inman at daniel.inman@wsj.com
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