* Oil briefly jumps over $2 as Western forces strike Libya
* Some progress seen at crippled Japanese nuclear reactors
* Yen steady after intervention, more G7 action expected
* Asia ex-Japan shares pick up, Citigroup sees big 2011
rally
* Japan markets closed for public holiday
(Updates to afternoon Asia)
By Saikat Chatterjee
HONG KONG, March 21 (Reuters) - Oil prices jumped more than
2 percent to top $116 a barrel on Monday as Western forces
launched air strikes on Libya, while Asian shares advanced on
bargain hunting in the wake of heavy losses last week.
The yen stayed on the defensive, although waning selling
momentum was making traders wary of the potential for further G7
action to curb the Japanese currency after the first joint
intervention by the grouping in a over decade.
Brent crude futures jumped more than 2 percent at
one point in early trade after the United Nations-mandated
attacks on Libya aimed at forcing Muammar Gaddafi to cease fire
on rebels and end attacks on civilians.
At 0608 GMT, the leading contract was up 1.5 percent at
$115.69 per barrel. NYMEX crude futures rose 1.85 percent
to $102.94.
Unrest in Syria and Yemen over the weekend, following social
unrest across North Africa that toppled national leaders, kept
oil traders on edge.
They said crude prices would only spike higher if the
Libyan conflict showed signs of degenerating into a ground war
and for now that looked unlikely.
But equally, crude prices are supported by expectations of
Japanese buying of oil and gas to feed power generators in the
wake of its nuclear plant crisis.
Oil has risen more than a fifth this quarter and the social
unrest in North Africa and the oil-producing Gulf provide enough
uncertainty to keep prices well bid.
"I can see uncertainty and fear driving the price of oil
higher in the short term," said Matthew Lewis, an analyst at CMC
Markets in Sydney.
Higher fuel prices will revive investors' concerns about
inflation and the prospect for further interest rate increases,
especially in emerging economies.
In share dealings, the MSCI index of Asian stocks outside of
Japan rose about 1 percent. Japan's markets were
closed for a public holiday.
The benchmark Nikkei share average plunged 10
percent last week as engineers battled to try to prevent a
meltdown and radiation leak at a nuclear power plant crippled by
the quake and tsunami.
Shares elsewhere in Asia dropped nearly 3 percent and the
unfolding drama in Japan weighed on markets in the United States
and Europe.
Investors kept a wary eye on news from Japan on Monday,
where there were signs of progress in bringing the stricken
power plant back under control.
The drop in Asian share prices following Japan's March 11
natural disaster brought equity valuations to average levels and
markets particularly in North Asia are attractive, said Markus
Rosgen, head of Asia ex-Japan strategy at Citigroup.
"From a technical perspective, Asia-ex Japan is very
oversold. Much of the bad news is in the price of Asian equities
and monetary policy is not hugely restrictive," said Rosgen, who
predicts the MSCI ex Japan will rise nearly 50 percent from
current levels by the end of the year.
Asian shares outside Japan have fallen nearly 5 percent this
quarter, underperforming a rise of more than 2 percent in the
broad S&P 500 stocks index in the United States and the
MSCI world share index , which is flat over the
same period.
With the Bank of Japan pumping massive amounts of liquidity
into its money markets to shore up sentiment and the Fed's
quantitative easing showing no signs of abating, markets should
be well supported for now.
The yen was largely steady after joint intervention
by the Group of Seven on Friday boosted the dollar against the
Japanese currency by nearly 4 percent.
The yen last traded at 80.92 per dollar after the
intervention on Friday pushed it down to 82.00. The central
banks stepped in after the yen surged to a record high of 76.25
on Thursday.
"Japanese officials will look to manage yen volatility,
rather than push prices in a given direction, suggesting renewed
strength may be allowed to progress undeterred provided it
progresses gradually," Ilya Spivak, currency strategist at
DailyFX, said in a note.
An undertone of caution pushed safe haven plays such as gold
higher, although it stayed well below its record high
around $1,445 an ounce hit earlier this month.
In China, interest rate swaps rose while stocks and the yuan
advanced after the central bank unexpectedly raised banks'
reserve requirement ratios for the third time this year after
markets had closed on Friday.
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuters.com/hedgehub
(Additional reporting by Ian Chua in SYDNEY and Alejandro
Barbajosa in SINGAPORE)
