Bareksa.com - Asian stocks rose in early trade on Monday after Wall Street rallied with the latest round of tensions in Ukraine easing for now, although simmering tensions in other geopolitical hotspots such as Iraq limited gains.

Wall Street surged on Friday after Russia's defence ministry said it had finished military exercises in southern Russia, which the United States had criticized as a provocative step amid the Ukraine crisis.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent after shedding 0.9 percent on Friday.

Tokyo's Nikkei rose 1.5 percent, helped as the yen's sharp rally against the dollar on Friday was reversed. The index had lost 3 percent on Friday.

Asian stock markets were unable to fully pare Friday's losses, with investors wary of piling back into risk assets as the situation in Iraq was marked by an increasing death toll and new U.S. air strikes.

The dollar, which suffered heavy losses against the safe-haven yen last week after U.S. President Barack Obama authorised air strikes in Iraq, stood steady after rebounding sharply late Friday as the Ukrainian news arrested the slide in U.S. Treasury bond yields.

Some observers saw the correlation between lower Treasury yields, and weaker dollar loosening amid the latest phase in geopolitical tensions.

Kathy Lien, managing director at BK Asset Management, said heightened geopolitical uncertainty makes Treasuries more attractive to investors and central banks looking to park their money in such safe havens, with their demand supporting the greenback.

"Geopolitical uncertainty is clearly driving risk appetite and the conflicts abroad has made U.S. assets very attractive," she wrote in a note to clients.

The dollar was up 0.1 percent at 102.12 yen after touching a low of 101.51 on Friday.

The euro stood little changed at $1.3407.

The benchmark U.S. Treasury 10-year note yielded 2.422 percent, having pulled back from a 14-month low of 2.349 percent struck Friday.

The 10-year yield on Japanese government bonds, another asset sought in times of geopolitical tension, stood poised to break below 0.500 percent, which would take it to a 16-month low.

In commodities, Brent crude oil extended losses after falling Friday as the U.S. air strikes in Iraq were perceived to lower risk of supply disruptions from OPEC's second-largest producer.

Brent crude dipped 12 cents to $104.90 a barrel. (Source: Kontan)