Asia shares held back by insipid Wall Street, dollar consolidates

Asian stocks struggled for traction on Monday after an uninspiring performance on Wall Street at the end of last week, while the dollar consolidated its gains against the yen and euro.

MSCI's broadest index of Asia-Pacific shares outside Japan stood virtually flat, while Tokyo's Nikkei lost 1.2 percent in early trade. Australian shares dipped 0.1 percent.

On Friday, the S&P 500 erased an early Federal Reserve-driven rally and closed slightly lower amid a selloff in biotech shares, and the Nasdaq lost 1 percent. The Dow, however, managed to rise 0.7 percent.

Fed Chair Janet Yellen last Thursday revived prospects of an interest rate hike before year-end, easing concerns about slowing global growth that helped the dollar and risk assets, which have been buffeted by fears over China's sputtering economy.

Strong second quarter U.S. GDP data released on Friday further sharpened the case for the Fed to raise rates in 2015.

Focus now turns to this Friday's all-important U.S. non-farm payrolls as the markets try to gauge whether labor market conditions are strong enough for the Fed to tighten monetary policy.

The dollar was little changed at 120.48 yen after edging up to a two-week high of 121.24 on Friday as U.S. Treasury yields rose on the strong U.S. GDP numbers and expectations of a Fed hike in 2015.

The euro was also steady, at $1.1187 after shedding 0.3 percent overnight.

"In terms of price action, we uphold our view of further dollar outperformance versus the emerging market currencies as risk premia remains elevated on China growth, outflows, and policy opacity concerns," wrote strategists at Barclays.

"Compared with developed countries, we expect the dollar to appreciate particularly vis-a-vis the euro, as we think the European Central Bank will have to ease monetary conditions at some point before year-end in order to meet its inflation target."

In commodities, the lackluster mood in equity markets spilled over and U.S. crude oil futures lost 0.6 percent to $45.42 a barrel.

Gold treaded water after being hit by a stronger dollar. Spot gold was little changed at $1,146.25 an ounce after dropping 0.7 percent on Friday.

Platinum, hit recently on fears demand for the metal used in diesel engines would diminish in the wake of the Volkswagen emissions scandal, nudged up 0.3 percent to $946.65 an ounce after losing 1 percent overnight. Platinum hit a 6-1/2-year low of $924.50 an ounce last week.