Asian stocks rose for the ninth day in 10 on Monday, with investors still focused on upward momentum in corporate earnings, though some worried whether the gains were racing ahead of longer-term economic prospects.

Japan's Nikkei share average posted its longest winning streak in 21 years, and South Korea's KOSPI since April 2006. Oil prices also climbed, rising to the highest since early July, as investors took cues from equity markets.

Major European stock futures were up 1.9 percent on hopes for an earnings recovery, while U.S. equity futures rose 0.2 percent.

In addition to a steady flow of companies reporting results this week, including Exxon Mobil Corp , Honda Motor Co <7267.T> and Mitsubishi UFJ Financial Group <8306.T>, investors will also look out for U.S. gross domestic product data for the second quarter due on Friday, hoping for some indication that a second-half recovery is on track.

Japan's Nikkei share average <.N225> closed 1.45 percent higher, hitting a nine-month high. The index was up for a ninth straight session, the longest rising streak since 1988.

Hopes for corporate earnings are helping shares extend the rally, while short-covering in stock futures is also giving them a lift, said Shinji Igarashi, equity manager of the sales department at Chuo Securities in Japan.

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> rose 1.6 percent to the highest in 10 months, with strength evenly spread out across consumer sectors, financials, materials and technology.

The index was at the highest since late September, having risen 68 percent since March 9, when investors began to move back to equities from cash after a period of intense volatility spurred by the global financial crisis.

Hong Kong's Hang Seng index <.HSI> was up 1.3 percent, with financial firms and property developers remaining darlings of the market. Shanghai stocks <.SSEC> rose 1.8 percent.

Judging by the appetite for newly listed shares in China, the stock market rally in Asia was not about to peter out soon. Some markets were even showing signs of running too hot.

HOT HOT HOT

Shares of Sichuan Expressway <601107.SS> debuted on the Shanghai Stock Exchange on Monday and more than quadrupled in price, blowing away analysts' expectations.

China State Construction Corp, the world's largest IPO this year will list on Wednesday, the official Shanghai Securities News said on Monday.

That's really too much speculation, apparently propelled by excessive liquidity in the system, said Huatai Securities analyst Zhou Lin in Nanjing.

Strong corporate listing prices will boost an 'easy-profit' mentality and bode well for future IPOs, but high prices for newcomers on the debut trading day and an expected fall as they return to normal valuations in coming weeks will hurt the market.

As of last week, about 3-in-4 of the 184 companies in the S&P 500 index had reported quarterly results above expectations, largely due to earnings in the financial sector, Thomson Reuters data showed.

Oil prices looked set to flirt with the psychologically important $70 a barrel level after having spent almost all of July trading below it.

The seemingly unquenchable appetite for global equities along with U.S. dollar weakness in the last few weeks has improved sentiment on crude, though some analysts wondered how long oil's support would last.

Oil's rally has again been supported by external factors, such as positive macroeconomic data and rally in the equities markets, and those factors, along with the U.S. dollar, should again set the tone for oil this week, said Toby Hassall, a commodities analyst at Commodities Warrants Australia.

But considering how actual demand in the U.S. is still quite weak, I think there is a downside risk for oil prices.

U.S. oil for September delivery rose 1 percent to $68.75 a barrel, while Brent was up 1.1 percent to $71.07.

The ICE Futures U.S. dollar index <.DXY> lost ground as stocks in Asia started to take off on Monday. It fell 0.2 percent, closing in on a one-month intraday low reached last Thursday.

Though equity markets reflected few concerns among investors about diving further into riskier assets, which usually would weigh on the safe-haven dollar, positioning may be a factor preventing further short-term weakness in the U.S. currency.

Traders on the International Monetary Market doubled the value of their net short term position to $16.6 billion in the week to July 21.

Such a quick buildup in bets against the dollar may mean the market is vulnerable to bouts of profit taking.

U.S. Treasury yields ticked higher as stocks rose. The benchmark yield on the 10-year note was at 3.69 percent, having bounced 37 basis points in the last two weeks as the global equity rally accelerated.

The market is expecting a record $115 billion in new supply this week.

Fear over the expected $2 trillion in supply this year pushed up benchmark Treasury yields from historic lows in March when the Federal Reserve announced its $300 billion Treasury purchase program aimed at lowering interest rates and restoring growth.

Emerging market central banks and investors, so far, have basically mopped up the new supply, keeping yields contained.

(Additional reporting by Rika Otsuka in TOKYO and Fayen Wong in PERTH)

(Editing by Kim Coghill)

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