Asian stocks fell Monday as it became apparent to investors that Europe's policymakers were still lingering on taking decisive action to contend with the euro zone debt crisis.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, pulled lower by Chinese shares. The index has risen about 1 percent so far in August and is hovering near a three-month high hit earlier in the month.

Hong Kong shares fell 0.9 percent and Shanghai slid 1 percent after data over the weekend showed home prices in China rose in July for a second month, spurring profit taking in the property sector, which has outperformed the broader market in the year to date.

The state-run Shanghai Securities Journal reported on Monday that rising housing prices could lead Beijing to impose more curbs on the sector to control housing inflation, which could include an expansion of the property tax pilot to include more cities and raising the pre-sales requirements.

Japan's Nikkei stock average gained 0.6 percent to a three-month high, with a weaker yen supporting exporters. .T

"You do get to a stage where a lot of investors are a little bit sceptical whether this run will continue," said IG Markets analyst Stan Shamu, of Australia's equities market ,which pulled back from a three-month high as investors took a breather in the absence of any clear catalyst to push the market higher.

Both the pan-Asia stock index and the Nikkei hit their 2012 lows in early June, with the recent bouts of rallies inspired by the European Central Bank hinting at a bond-buying programme to contain Spain's surging borrowing costs and backing from Europe's paymaster Germany.

On Friday, a record high for Apple Inc (AAPL.O) shares boosted U.S. stocks while the Standard & Poor's 500 Index stayed near a four-year high, and European shares closed at 13-month highs for their best week in seven years.

"The market is gaining ground on a much more solid footing compared to the first-quarter liquidity rally and the relative stability offers more room for further, sustainable gains," Tong Yang Securities in a note to clients.

In a sign of easing investor fears, the CBOE VIX volatility index, which measures expected volatility in the S&P 500 over the next 30 days, plumbed a five-year low on Friday.

The dollar rose to a fresh five-week high against the yen at 79.660 yen.

Asian credit markets were calm, with the spread on the iTraxx Asia ex-Japan investment-grade index barely changed.

Oil rose, with Brent up 0.5 percent to $114.26 a barrel and U.S. crude up 0.3 percent to $96.27 a barrel.

EUROPE RESUMES BUSINESS

With many European policymakers away on summer holidays, markets have enjoyed a respite in recent weeks from negative headlines.

While markets anticipate some conclusive action to calm the euro zone's troubled bond markets to be announced at the European Central Bank's policy meeting next month, the focus this week is on a meeting between leaders of Greece and Germany on Friday.

Senior German politicians already stepped up the pressure on Greece to stick to its reforms, and made clear that there was no appetite in the German parliament for a third aid package for Athens.

Recent polls by Reuters showed that successive debt bombshells from Greece have so far failed to blow apart the political bonds that hold it in the euro zone, persuading growing numbers of economists to conclude that the country has a future inside the currency union.

The ECB could outline details of its debt-buying programme at its September 6 meeting to ease pains for Spain, and its economy minister Luis de Guindos said the ECB must take forceful and unlimited steps to buy sovereign debt to help Madrid cut its refinancing costs and remove doubts over the euro zone's future.

He said the government will study the details of the ECB's debt-buying programme before making a decision on applying for more European aid.

Germany's weekly Der Spiegel magazine reported on Sunday the ECB is considering setting yield thresholds for any purchases of a struggling euro zone country's bonds.

A survey published on Friday showed U.S. consumer confidence rose in early August to its highest level in three months while the Conference Board's gauge of future U.S. economic activity improved in July.

With recent solid U.S. data raising uncertainty over whether the Federal Reserve would take further easing steps, and hopes in Europe spurred investors to shift less money into bond funds worldwide last week, fund-tracker EPFR Global said on Friday.

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