* MSCI Asia ex-Japan up 0.5 pct, Nikkei closes at 2-month
* Yen slips to near 7-month low vs dollar over December
* Oil supported by escalating tension over Gaza attacks
* European shares likely to rise
By Chikako Mogi
TOKYO, Nov 19 (Reuters) - Asian shares rose on Monday,
supported by hopes U.S. politicians can overcome an imminent
fiscal crunch while the yen fell to a near seven-month low
against the dollar on expectations a new government chosen in
next month's election could pump large amounts of stimulus cash
into the economy.
A 0.2 percent gain in U.S. stock futures point to a
firm Wall Street open, and financial spreadbetters predict
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX will open as much as 0.9 percent
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.5 percent, recovering from Friday's
Its energy sector outperformed as mounting
supply concerns on escalating tension from Israeli air strikes
on the Gaza Strip and Hamas rocket attacks on Israel
underpinned oil prices.
The materials sector was among top gainers
as London copper rallied 1 percent to $7,684 a tonne on
a renewed growth outlook for China and hopes for a solution to
the U.S. fiscal cliff.
Australian shares climbed 0.6 percent but Shanghai
shares underperformed with a 0.5 percent drop, having
earlier touched levels not seen since early 2009.
"We had some positive leads from the U.S. on Friday. Our
market had been underperforming last week," Peter Esho, chief
market analyst at City Index, said of Australian equities.
"There's some hope that the negotiations in the U.S. around the
fiscal situation may somewhat improve - the prospects around
that may improve this week."
Japan's Nikkei average, which bucked the broad Asian
downtrend on Friday and surged 2.2 percent, extended gains with
a 1.4 percent climb to close at a two-month high.
Speculation that the leader of the opposition Liberal
Democratic Party, which is expected to win the Dec. 16
elections, will call for more stimulus including further
aggressive easing by the Bank of Japan also undermined the yen.
The BOJ begins a two-day policy meeting on Monday, and is
expected to refrain from taking fresh policy steps.
The dollar hit a near seven-month high against the yen at
81.59 yen on Monday. A weaker yen helps support the
economy and boosts sentiment for Japanese equities investors.
A senior trader at a foreign bank said investors had been
underweight Japanese equities and the rally could have further
to go as they start to put their money into Japan, advising
investors to cover their positions in very heavily short-sold
sectors such as electronics.
FISCAL CLIFF, GREECE EYED
Aside from Japanese politics, market players closely watched
negotiations among U.S. Congressional leaders to avoid a budget
crisis, and prepared for European officials' meeting on Tuesday
to discuss aid for debt-stricken Greece.
Hope that U.S. politicians would find a way to steer clear
of the "fiscal cliff" boosted U.S. stocks on Friday. European
shares sank to a 3-1/2-month closing low, for their worst week
since the end of May, on persistent concerns over U.S. fiscal
policy and the euro zone debt crisis.
Top lawmakers from both major U.S. political parties on
Friday hinted at the possibility of a budget compromise that
involves spending cuts and additional revenue, although they
were short on details.
"The good news is the tone of Friday's White House meeting
but the prospect of no agreement until at least mid-December
fits our view that the two sides are starting negotiations from
rather distant points," Sean Callow, senior currency strategist
at Westpac bank in Sydney, said in a note.
"As such, there will be plenty of negative headlines in
coming weeks that weigh on Treasury yields and boost USD, which
is yet again trading like a safe haven even when the bad news is
generated by the US."
The dollar fell 0.2 percent, retreating from the two-month
high of 81.455 hit on Friday against a basket of key currencies
. The drop in the dollar supported gold, which
added 0.5 percent to $1,721.60 an ounce.
The euro rose 0.1 percent to $1.2760, with traders
waiting to know whether euro zone finance ministers and
International Monetary Fund Managing Director Christine Lagarde
would agree a way to make Greece's debt manageable.
"As the EU prepares a bundled aid package to avert a Greek
default, headlines coming out of the meeting may fuel a relief
rally in the euro, but we will maintain our bearish forecast for
the single currency as the region faces a deepening recession,"
said David Song, currency analyst at DailyFX.
U.S. crude futures jumped 1 percent to 87.81 a barrel
and Brent rose 0.7 percent to $109.70.
Asian credit market spreads on the iTraxx Asia ex-Japan
investment-grade index were little changed.