Oil firm as West strikes Libya, Asian shares rise

Oil prices jumped more than 2% to top $116 a barrel on Monday as Western forces launched air strikes on Libya, while Asian shares advanced on bargain hunting in the wake of heavy losses last week.
The yen stayed on the defensive, although waning selling momentum was making traders wary of the potential for further G7 action to curb the Japanese currency after the first joint intervention by the grouping in a over decade.
Brent crude futures jumped more than 2% at one point in early trade after the United Nations-mandated attacks on Libya aimed at forcing Muammar Gaddafi to cease fire on rebels and end attacks on civilians.
At 0608 GMT, the leading contract was up 1.5% at $115.69 per barrel. NYMEX crude futures rose 1.85% to $102.94.
Unrest in Syria and Yemen over the weekend, following social unrest across North Africa that toppled national leaders, kept oil traders on edge.
They said crude prices would only spike higher if the Libyan conflict showed signs of degenerating into a ground war and for now that looked unlikely.
But equally, crude prices are supported by expectations of Japanese buying of oil and gas to feed power generators in the wake of its nuclear plant crisis.
Oil has risen more than a fifth this quarter and the social unrest in North Africa and the oil-producing Gulf provide enough uncertainty to keep prices well bid.
"I can see uncertainty and fear driving the price of oil higher in the short term," said Matthew Lewis, an analyst at CMC Markets in Sydney.
Higher fuel prices will revive investors' concerns about inflation and the prospect for further interest rate increases, especially in emerging economies.
In share dealings, the MSCI index of Asian stocks outside of Japan rose about 1%. Japan's markets were closed for a public holiday.
The benchmark Nikkei share average plunged 10% last week as engineers battled to try to prevent a meltdown and radiation leak at a nuclear power plant crippled by the quake and tsunami.
Shares elsewhere in Asia dropped nearly 3% and the unfolding drama in Japan weighed on markets in the United States and Europe.
Investors kept a wary eye on news from Japan on Monday, where there were signs of progress in bringing the stricken power plant back under control.
The drop in Asian share prices following Japan's March 11 natural disaster brought equity valuations to average levels and markets particularly in North Asia are attractive, said Markus Rosgen, head of Asia ex-Japan strategy at Citigroup.
"From a technical perspective, Asia-ex Japan is very oversold. Much of the bad news is in the price of Asian equities and monetary policy is not hugely restrictive," said Rosgen, who predicts the MSCI ex Japan will rise nearly 50% from current levels by the end of the year.
Asian shares outside Japan have fallen nearly 5% this quarter, underperforming a rise of more than 2% in the broad S&P 500 stocks index in the United States and the MSCI world share index , which is flat over the same period.
With the Bank of Japan pumping massive amounts of liquidity into its money markets to shore up sentiment and the Fed's quantitative easing showing no signs of abating, markets should be well supported for now.
The yen was largely steady after joint intervention by the Group of Seven on Friday boosted the dollar against the Japanese currency by nearly 4%.
The yen last traded at 80.92 per dollar after the intervention on Friday pushed it down to 82.00. The central banks stepped in after the yen surged to a record high of 76.25 on Thursday.
"Japanese officials will look to manage yen volatility, rather than push prices in a given direction, suggesting renewed strength may be allowed to progress undeterred provided it progresses gradually," Ilya Spivak, currency strategist at DailyFX, said in a note.
An undertone of caution pushed safe haven plays such as gold higher, although it stayed well below its record high around $1,445 an ounce hit earlier this month.
In China, interest rate swaps rose while stocks and the yuan advanced after the central bank unexpectedly raised banks' reserve requirement ratios for the third time this year after markets had closed on Friday.