Asia report: Markets start week in a good mood

Markets in Asia traded higher on Monday, extending their gains from Friday after fresh stimulus announcements from the European Central Bank.

The Nikkei 225 closed up 1.74% at 17,233.75, while the South Korean Kospi finished up 0.04% at 1,972.27. Hong Kong's Hang Seng Index gained 1.17% to 20,435.34.

On the mainland, the Shanghai Composite closed up 1.76% to 2,859.88, and the Shenzhen Composite added 3.56% to 1,745.28.

One of China's largest property firms, China Vanke, was a big gainer in China and Hong Kong after it signed a deal worth up to £6.5bn with underground railway operator Shenzhen Metro Group, which could make the latter its largest shareholder.

It came amid tense times at Vanke, where management had been battling for control with its current biggest shareholder Baoneng. Hong Kong-listed shares in China Vanke closed up 10%.

A number of commentators believed the ECB's stimulus announced last Thursday boosted demand for risky assets in the region, though there were still doubts about the rally.

"The feeling on the floors is that the move higher in risk assets still has legs, but there is a healthy degree of scepticism and there are a number of longs waiting to reverse to short or increase cash allocations should prices show even the slightest hint of rolling over," said IG chief market strategist Chris Weston.

Julius Baer head of Asia research Mark Matthews noted that markets were seeing the ECB's targeted longer-term refinancing operations as "free money" for banks.

"Assets will inflate in places the money wasn't intended to go, but also where it was intended," he said.

Central banks were set to be a focus of the week, with the Bank of Japan starting its two-day monetary policy meeting during the Monday trading day and the US Federal Reserve meeting later in the week.

Analysts were expecting no rate hike from the Fed, keeping an eye on the so-called dot plot for guidance on future moves. The plot shows the position of individual Fed committee members on interest rates in the current and future years.

There were also no expectations of movement from the BoJ, with Mizuho Bank senior economist Vishnu Varathan saying it "will probably pause for a while to evaluate its impact on inflation and on the banking sector."

Down under, the S&P/ASX 200 closed up 0.37% to 5,185.45, buoyed by advances in the country's financials and energy stocks.

The Australian dollar - considered by many a proxy for China's economy - touched its highest level since July 2015 against the greenback during the session. It was last trading 0.26% weaker at AUD 1.3255.

Oil prices retreated during Asian trading. Brent crude was last down 1.53% to $39.78 and West Texas Intermediate was down 1.99% to $37.75. Energy plays in Australia were largely up, with Oil Search adding 0.14% and Santos climbing 3.37%.

The country's biggest telco and owner of the local loop, Telstra, finished up 2.33% after it announced it was ending its joint venture negotiations with Philippine conglomerate San Miguel. It had been in discussions to launch a wireless service in the south east Asian archipelago.

In New Zealand, the S&P/NZX 50 climbed for the eight day straight, by 0.8% to 6,566.83 - a fresh record high for the index. It was led by Sky Network Television, amid rumours the subscription television provider was touting its shares overseas as local investors grew wary of the threat of Netflix and internet television.

In currencies, Japan's safe-haven yen remained at the 113 mark against the dollar, last trading 0.15% stronger at JPY 113.69. Japanese exporters closed mostly higher, with Honda up 0.48%, Nissan gaining 1.5% and Toyota ahead 0.98%.

Renminbi was flat against the dollar, after the People's Bank fixed the onshore yuan slightly weaker at CNY 6.4913 per USD. It was last touching CNY 6.4938.

The New Zealand dollar was weaker, last back by 0.48% to NZD 1.4896 against its US counterpart.