Volkswacht Bodensee - Oil rises on fresh Middle East fears, equities advance

The drone strike on a base in Jordan -- which came two days after Yemen's Huthi group struck a vessel in the Red Sea -- ramped up tensions in the region and stoked worries about supplies through the key trade waterway.

Both main crude contracts rose more than one percent in early trade -- hitting levels not seen since November -- before paring the gains slightly.

"The news of three US troops being killed by a drone attack, and President Biden saying 'we shall respond', will likely dial up the market's focus on the region," Andrew Ticehurst at Nomura, said.

The development comes as Israel presses on with its war against Hamas, adding to investor concerns about a wider conflagration that brings in Iran and the United States.

Still, the reports did little to dent equity markets in Asia,

Hong Kong led the way, piling on more than one percent as traders welcomed news that China would stop the lending of certain shares for short selling as officials try to put a floor under the country's battered markets.

Willer Chen of Forsyth Barr Asia said that while the move would likely have a limited effect on stabilising equities, it was "a good gesture as market participants had been calling for regulators to step in on this front".

Shanghai edged down on news that a Hong Kong court had issued a winding-up order against Chinese developer Evergrande.

Evergrande's Hong Kong-listed shares collapsed more than 20 percent on the news before they were suspended.

Still, Redmond Wong, chief China strategist at Saxo Markets, said "the winding-up of Evergrande's Hong Kong listing entity has been widely anticipated and should not impact the general market much".

The decision came amid worries that a huge debt crisis in China's property sector could spill over into the wider economy.

The order kickstarts a long process that should see Evergrande's offshore assets liquidated and its management replaced, after the company failed to develop a working restructuring plan.

Traders were also awaiting a crucial policy decision by the US Federal Reserve this week and the release of more corporate earnings.

While the Fed meeting is not expected to see any move on interest rates, traders hope to hear some guidance from officials on their plans, with a cut in March currently seen as a toss-up.

There were also gains in Tokyo, Sydney, Seoul, Mumbai, Bangkok, Taipei, Jakarta and Wellington.

Asia's mostly upbeat day followed another record close for the Dow on Wall Street that came after the central bank's preferred inflation gauge indicated prices were being brought under control.

As well as the Fed's meeting, the week also sees a number of other notable events, including the release of figures on US jobs creation and consumer sentiment, and Chinese manufacturing activity.

Amazon, Microsoft and other large technology companies are also due to report their earnings.

- Key figures around 0700 GMT -

West Texas Intermediate: UP 0.4 percent at $78.33 per barrel

Brent North Sea Crude: UP 0.4 percent at $83.28 per barrel

Tokyo - Nikkei 225: UP 0.8 percent at 36,026.94 (close)

Hong Kong - Hang Seng Index: UP 0.9 percent at 16,096.02

Shanghai - Composite: DOWN 0.9 percent at 2,883.36 (close)

Dollar/yen: DOWN at 147.00 yen from 148.13 yen on Friday

Euro/dollar: DOWN at $1.0844 from $1.0858

Pound/dollar: UP at $1.2704 from $1.2703

Euro/pound: DOWN at 85.36 pence from 85.44 pence

New York - Dow: UP 0.2 percent at 38,109.43 (close)

London - FTSE 100: UP 1.4 percent at 7,635.09 (close)

R.Kloeti--VB