IDX BREAK 3700 this week ?

Commodities jump, Nikkei hits 3-month highs

Gold hit a fresh record and Japanese shares struck three-month highs on Monday as low interest rates in advanced economies drove investors to seek higher returns and protection against inflation.

The dollar rose sharply as traders continued to unwind short positions after stronger-than-expected U.S. jobs data on Friday, and as worries about debt problems in Ireland and other parts of the euro zone weighed on the euro.

Major European shares (^FTEU3 - News) eased 0.1 percent in early trade as investors took profits on last week's strong rally, which had pushed some markets into "overbought" territory. "A liquidity bubble is emerging in global markets," said Kenichi Hirano, operating officer at Tachibana Securities. "Investors increasingly believe Japanese stocks, which have lagged behind, will also reverse course."

Super-loose monetary policy and tepid economic growth in most of the developed world has fueled the hunt for better yields. Friday's strong U.S. jobs report further encouraged the drive into riskier assets, although the effect was muted in the currency market by the bounce in the U.S. dollar.

The U.S. dollar index (^DXY - News) against a basket of major currencies rose 0.4 percent, extending its rebound from an 11-month low hit last week, restraining the yen from 15-year peaks and offering some respite to Japanese exporters.

Japan's Nikkei average (Osaka:^N225 - News) rose 1.1 percent to its highest level since late July, and was the day's best performer in Asia.

The broader MSCI Asia ex-Japan index (^MIAPJ0000PUS - News) eased 0.1 percent but was still a whisker from Friday's 2-1/2-year highs.

Shanghai stocks (^SSEC - News) struck seven-month peaks and the Indonesian bourse (Jakarta:^JKSE - News) rose to yet another record high as foreign funds continued to flood into fast growing emerging markets, spurred by expectations that U.S. interest rates would stay near zero for a long time.

Since the start of 2009, Indonesian shares have leapt 172 percent, dwarfing a mere 10 percent gain in the Nikkei over the same period.

INFLATION FEARS PUSH GOLD TO NEW HIGH

Firm commodity prices led resource stocks higher across the region, though the dollar's rebound pared gains in energy and metals prices on Monday.

In Japan, Sumitomo Metal Mining Co (Tokyo:5713.T - News) climbed 2.3 percent and Mitsui Mining and Smelting (Tokyo:5706.T - News) gained 2.7 percent. Australia's Rio Tinto (ASX:RIO.AX - News) rose 0.2 percent.

Gold, a traditional hedge against inflation, briefly powered toa record above $1,398 an ounce on concerns that fresh policy easing unveiled by the U.S. Federal Reserve last week would inevitably fuel inflationary pressures that may prove hard to snuff out.

Crude oil (O/R) held near two-year highs and silver hit 30-year peaks. (source: Yahoofinance.com)