Asian shares have started cautiously as central bank largesse globally boosts sentiment but rising trade tensions between the world’s two biggest economies dulls risk appetite.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent on Monday, with South Korea, Australia and New Zealand all starting higher.

Japan’s Nikkei jumped 1.5 per cent after the Nikkei newspaper reported the country was considering a fresh stimulus package worth over $US929 billion ($A1.4 trillion) that will consist mostly of financial aid programs for companies hit by the coronavirus pandemic.

Analysts expect trading to be subdued with US and UK markets shut for public holidays.

“Nevertheless, focus is likely to be on China’s National People’s Congress, as discussions of political and economic policies continue,” ANZ analysts wrote in a note.

“Geopolitics will gain attention as US-China relations continue to represent a downside risk for markets.”

On Friday, China proposed imposing national security laws on Hong Kong as Beijing unveiled details of the legislation that critics see as a turning point for the former British colony.

The proposal drew the ire of Hong Kong residents who defied social distancing rules and protested on streets while the United States warned Beijing’s move could lead to US sanctions.

The US Commerce Department said late on Friday it was adding 33 Chinese companies and other institutions to a blacklist for human rights violations and to address US national security concerns.

Sino-US ties have nosedived since the outbreak of the new coronavirus, with the administrations of President Donald Trump and President Xi Jinping trading barbs over the pandemic, including accusations of cover-ups and lack of transparency.

The two superpowers have also clashed over Hong Kong, human rights, trade and US support for Chinese-claimed Taiwan.

At the same time, analysts say extensive central bank stimulus to help blunt the economic shock from the COVID-19 pandemic continues to underpin sentiment and buoy equity markets.

Japan, last week, unveiled a lending program to channel nearly $US280 billion to small businesses hit by the coronavirus. India slashed rates for a second time this year and the European Central Bank, in the minutes from its last meeting, said it was ready to expand emergency bond purchases as early as June.

Later in the day, investor attention will shift to Germany, where the May IFO survey is expected to show some improvement off a record low base.

Action in currencies was a tad muted.

The US dollar was up 0.1 per cent on the Japanese yen at 107.73. The euro held near a one-week trough at $US1.0903. Sterling added 0.1 per cent to $US1.2182 while the Australian dollar gained 0.1 per cent to $US0.6543 after losses on Thursday and Friday.

Rising trade tensions hit oil prices with US crude falling 20 cents, or 0.6 per cent, to $US33.05 a barrel. Brent was off 31 cents, or 0.9 per cent, at 34.82.

Spot gold was off a bit at $US1,730.5 an ounce.

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