The dollar hovered near a two-week low against a basket of currencies on Monday and Asian stocks were pinned in tight trading ranges as weak U.S. economic data and fears of a Greek debt default kept many investors on the sidelines.

European stocks were also set to dip, tracking weakness in Asia, but trading was expected to be thin with holidays in the United States and the UK.

European Union and IMF officials are likely to deliver their verdict this week on Greece's faltering drive to bring its budget deficit under control.

Compounding euro zone debt woes, a government minister in Ireland said it may have to ask for another loan from the EU and IMF because it will struggle to return to debt markets to raise funds next year.

The euro fell to $1.4263, having pulled back from resistance near $1.4327, its 55-day moving average.

The single currency, which has bounced off of a two-month low of $1.3968 hit a week ago on trading platform EBS, also faces resistance near $1.4369, the top of the cloud on the daily Ichimoku chart, a technical analysis tool popular among traders.

Against a basket of currencies <.DXY>, the dollar was trading near the 75 line, just shy of a two-week trough hit in the previous session.

A batch of weak data has also raised questions on whether the U.S. economic recovery is faltering, raising expectations that authorities may keep interest rates at zero well into 2012, undermining the dollar's appeal.

Traders are also awaiting global manufacturing data on Wednesday for any signs of a slowdown in the world economy.

While Asian stocks have floundered in recent months, the appeal of fixed income assets has grown as regional central banks look set to keep raising interest rates to tackle inflation.

Year-to-date volumes of $47.4 billion in bonds sold in dollars, euros and yen from Asia ex-Japan, ex-Australia is already more than half of $83.6 billion transacted in all of 2010. Morgan Stanley projected that at the current pace the annual tally could end up in excess of $100 billion.

London-listed Indian mining company Vedanta Resources last week priced $1.65 billion worth of five- and 10-year bonds, which marked the largest high-yield bond out of Asia.

That bullishness hasn't been restricted to such bonds only.

Local currency debt have also emerged as a favorite for after January's selloff with net foreign ownership in Indonesian rupiah bonds rising to a record.

Measured in dollar-adjusted terms, total returns for HSBC Asia's U.S. dollar bond index is three percent on a year-to-date basis, according to Thomson Reuters data.

Its local currency bond index counterpart has delivered 2.5 percent while MSCI's index of Asia-Pacific shares outside Japan is up about 1.5 percent.

SOUTHEAST ASIA BENEFITS

While credits had yet another roaring month, equity indices across the region were mostly down in May, led by Chinese shares <.SSEC> which are set to post a 7 percent drop.

For the day, Japan's Nikkei <.N225> and Australia <.AXJO> ended down 0.2 percent and 0.4 percent, respectively, while the MSCI index of Asia Pacific stocks outside Japan bounced slightly after falling for five consecutive weeks.

Southeast Asian markets were the clear outperformers with Malaysia and Indonesia among the leaders, posting marginal gains for the month, as authorities demonstrated a greater urgency to tackle rising prices after an inflation scare in January.

In the past these (Southeast Asian) markets were very susceptible to inflationary pressures, but due to better economic management, they are not so much of a hot potato for investors nowadays, said Khiem Do, chairman of Asia multi-asset team at Barings Asset Management in Hong Kong.

As long as North Asia continues to trade in a range and is dogged by inflationary pressures, these markets will continue to benefit, he said.

Elsewhere in markets, U.S. Treasury bond yields held near six-month lows, with 10-year yields at 3.07 percent compared to 3.29 percent at the start of the month.

In commodity markets, U.S. crude futures was broadly stable around the $100.30 per barrel mark.

The New Zealand dollar extended its gains to hit its highest in 26 years of $0.8218, the kiwi's loftiest level since it was floated in March 1985.

Australia Japan United kingdom Morgan Stanley