TOKYO Oil jumped on Monday as the OPEC considered reducing output at its meeting later this week, while the pound went up after the UK government said it would reverse a controversial tax cut that had roiled British markets.
Asian stocks fell mostly in holiday-thinning trade, although Japanese markets found support on strong energy and semiconductor shares.
The British government announced plans to reverse the proposed scrapping of the higher income tax that had caused a backlash in the governing Conservative Party.
The pound rose as far as $1.28, its highest in 10 days, while FTSE futures indicated a strong recovery in a stock market that has been battered by concerns over Prime Minister Liz Truss and finance minister Kwasi Kwarteng's spending plans.
It is a good step in the right direction from a market perspective. It will take time for markets to buy the message, but it should help ease the pressure, said Jan Von Gerich, chief analyst at Nordea.
There are still questions and sterling will likely remain under pressure. Around Asia, stocks fell outside Japan. MSCI's broadest index of Asia-Pacific shares ex-Japan was down 1.04 per cent, on course for its fourth straight session of losses. It fell nearly 14 per cent over the past quarter.
U.S. crude futures went up 2.70 per cent to $81.64 a barrel after OPEC sources told Reuters oil production could be cut by between 500,000 and one million barrels a day. Brent crude rose 2.55 per cent to $87.31 per barrel.
Japan's Nikkei 225 rose 0.50 per cent with energy stocks leading the index's gains and upbeat quarterly earnings from Mimasu Semiconductor boosting chip shares.
Minutes from the Bank of Japan's September meeting were released on Monday, showing members debated the possibility of inflation surpassing expectations under the bank's ultra-easy monetary policy, which ultimately went unchanged.
Ayako Fujita, a researcher at JPMorgan, wrote in a note that some participants suggested that the BoJ should closely monitor whether the recent cost pressures will lead to a virtuous cycle of higher wages. The BoJ needs to change its policy because of wage trends, and we think that this is a good sign. The yen fell as low as 145.4 to the U.S. dollar despite comments from Japan's finance minister Shunichi Suzuki that the government would take decisive steps to prevent currency moves.
It was the first time since Sept. 22, when the Ministry of Finance intervened to prop up the currency, which has hit 24 year lows against the dollar this year. It later pared losses and was last at 144.86.
The S&P ASX 200 index fell 0.27 per cent in Australia, where some states are observing a public holiday.
South Korea had a national holiday and China entered the Golden Week break on Monday. Hong Kong is closed for a public holiday on Tuesday.
ISM manufacturing is unlikely to hurt the optimism around the U.S. economy that has been building up further with positive economic indicators released over the last few weeks, according to Saxo Bank market strategist Redmond Wong.
The Reserve Bank of Australia meets on Tuesday, with markets expecting another 50 basis point rate hike, while Japan's consumer price index is likely to show another pick up in inflation.
Spot gold was up 0.27 per cent to $1,664. An ounce is 0900 an ounce.