Asian stocks rose to record highs on Monday on growing optimism about the U.S. economy, but diminished expectations for an imminent Japanese interest rate rise pushed the yen to an all-time low versus the euro.

European shares looked set to open lower, taking a breather after strong gains last week with financial bookmakers calling for London's FTSE 100 Index to open down 14 to 17 points.

Spot gold rose to a 1-½ week high above $656 an ounce, boosted by a firm euro and strong crude oil prices, which were buoyed by supply worries at a time of peak summer gasoline demand in the United States.

Japan's Nikkei average climbed nearly 1.0 percent to its highest close in nearly four months, while the MSCI index of Asian stocks outside of Japan advanced more than 1.5 percent in afternoon trade, after scaling a record high.

Hong Kong's Hang Seng Index, South Korea's KOSPI, Singapore's Straits Times Index all climbed more than 1 percent to record highs. Philippines and Indonesian stocks also reached all-time peaks.

U.S. data on Friday, which showed consumer prices, excluding volatile food and energy items, rose just 0.1 percent in May, half the pace expected by Wall Street, had helped soothe inflation fears in Asia's top export market.

Global markets are going crazy, but there's a reason for that since people believe we are in the middle of a Goldilocks scenario: tame inflation and good growth, said Kim Hyun-tae, a fund manager at Landmark Investment Management in Seoul.

Among the biggest gainers were major exporters such as Canon Inc., Samsung Electronics and flat screen maker LG.Philips LCD.

In Australia, the major miners including BHP Billiton and Rio Tinto advanced more than 2 percent each, finding further support from strong base metals prices.

Shanghai copper rose 2 percent on threats to supply and limited world stocks.

Mainland Chinese shares added 2.6 percent in late trade and were on track to retest record highs as worries about tighter monetary policy eased after the government refrained from taking steps at the weekend to cool the economy.

Elsewhere, Taiwan's stock market was closed for a public holiday and will reopen on Wednesday.

YEN STRUGGLES

Investors gave the yen a wide berth after Bank of Japan governor Toshihiko Fukui said on Friday the authority needed more evidence of sustained economic expansion before raising interest rates.

The euro touched a record high of 165.56 yen before retreating slightly to 165.45 yen by 0615 GMT, but it was little changed at one-week highs versus the dollar at $1.3388.

Against the yen, the dollar was trading at 123.56 yen, just off a 4-½ year high of 123.66 yen hit on Friday.

Suspected central bank intervention briefly dragged the New Zealand dollar lower, but demand for the high-yielding currency saw the kiwi recover.

It slipped to $0.7502 from around $0.7550 in late U.S. trading on Friday before bouncing back to $0.7560.

With an official interest rate of 8.0 percent, New Zealand boasts the highest rates in the industrial world and the central bank has said the currency is unjustifiably high.

London Brent crude for August delivery was flat at $71.47 a barrel by 0615 GMT as traders were nervous over supply threats.

Gunmen in Nigeria overran a 40,000 barrels per day oilfield station on Sunday. About 600,000 bpd of the country's oil production is shut down because of militant attacks.

A dispute over Iran's nuclear program adds to concerns about a potential loss of supply as the United States hits its peak summer gasoline demand.

Japanese government bond (JGB) prices rose after last Friday's comments from Fukui, pushing the benchmark 10-year yield down 4.5 basis points to 1.89 percent.

But further gains may be limited, warned Tetsuya Miura, a bond strategist at Shinko Securities.

Expectations that a rate hike is coming in a few months will cap gains in the JGB market, Miura said.

U.S. Treasuries barely budged in lackluster Asian trade, losing steam after Friday's rally with the benchmark 10-year bonds yielding 5.17 percent.

(Additional reporting by Rafael Nam in SEOUL)

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