Asian stocks eased on Monday, pulling further away from 13-month highs hit last week, as investors worried prices may have raced too far ahead of economic fundamentals, with shares in China feeling supply pressures ahead of a string of IPOs.

The U.S. dollar extended last week's gains with traders covering their short positions ahead of this week's Federal Reserve policy meeting and a Group of 20 summit.

Against a basket of currencies, the dollar's <.DXY> rebound from a one-year low of 76.01 on Sept 17 helped pull gold from near 18-month highs. The yellow metal has gained 16 percent so far in 2009 but has still failed to top its all-time peak of $1,030 an ounce struck last year.

Trade was sluggish and volumes are expected to be on the lower side in Asia with Japan shut until Thursday for holidays. Markets in Singapore, India, Indonesia, Malaysia and the Philippines were also shut on Monday for holidays.

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> dipped 0.26 percent, after surging 80 percent since mid-March when global markets started to rally on hopes that the financial crisis had bottomed out.

This has taken price-earnings multiples on a 12-month forward basis to above 15.2 times, near this year's high of 15.5 struck in early August, according to data from global estimates tracker Thomson Reuters I/B/E/S.

Valuations are certainly more expensive than they have been, but we don't think alarmingly so, said Mark Konyn, who oversees about $11 billion as Asia-Pacific chief executive of RCM, a unit of Allianz Global Investors.

Investors have positioned themselves away from some of the China themes and more to themes aimed at recovery in the U.S., he said.

U.S. markets ended modestly higher on Friday on optimism that the global economic recovery will be strong enough to boost corporate profits and justify higher share valuations. <.N>

The U.S. Federal Reserve is expected to keep the benchmark interest rate unchanged in a range of zero to 0.25 percent at the end of a two-day meeting on Wednesday as it waits to see if a tentative recovery finds solid footing.

Primary debt dealers surveyed by Reuters expect the Fed will not start raising rates until next year for fear of derailing the recovery. Many see a one-in-five chance of a double-dip recession, in which an economy sinks back into recession after a brief rebound.

Investors will also be eyeing a meeting of leaders from the Group of 20 developed and emerging nations on Sept 24-25.

The leaders are expected to reiterate that economic support measures will remain in place as long as needed, even as they look beyond crisis fighting to issues such as bankers' bonuses, financial regulation and global trade imbalances.

CHINA EYES IPOs

Highlighting investor skittishness, shares in Shanghai <.SSEC> fell more than 3 percent by mid-morning on Monday as investors fretted about the prospect of a sharp increase in shares from upcoming IPOs and worried that recent gains may be overdone.

Analysts said subscriptions for 10 companies to be listed on China's Nasdaq-style market to fund high-growth start-ups had come faster than expected and could lead to a mild consolidation for the index.

South Korean stocks also eased 0.3 percent after a four-session gaining streak with foreigners piling into the country's markets ahead of South Korea's upgrade to developed market status by FTSE effective Monday.

The Korea Composite Stock Price Index <.KS11> (KOSPI) was marginally lower after dropping as much as 0.5 percent in early trade.

Foreigners have been net buyers on all but two days this month, bringing in $4.9 billion in the last 11 sessions.

Foreign investors' buying has slowed following their aggressive accumulation of Seoul shares prior to South Korea's official joining of the FTSE, said Chung Seung-jae, a market analyst at Mirae Asset Securities.

Still, valuations in Seoul look relatively attractive.

The KOSPI's price multiple based on 12-month forward earnings estimates was about 9.7 as of Sept 18, compared with the region's multiple of over 15 times.

Buying... could pick up after third quarter earnings figures if numbers come out strong, Chung added.

Australia's benchmark S&P/ASX 200 index <.AXJO> dropped 0.4 percent, led lower by weak resources stocks which were in turn depressed by softer commodity prices.

Oil prices eased below $72 a barrel as traders booked profits after a 5 percent rally last week.

(Editing by Kim Coghill)

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