Asian shares slipped on Monday as Israel's push into Gaza stirred fears of a wider conflict ahead of central bank meetings in the United States, Britain and Japan, the latter of which might see a policy tightening.

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The earnings season also continues with Apple, Airbnb, McDonald's, Moderna and Eli Lilly & Co among the many reporting this week. Results so far have been underwhelming, contributing to the S&P 500's retreat into correction territory at 4,117.

"The price action is bad as SPX could not defend a key 4,200 level; risk is it heads to the 200-week moving average of 3,941 before a trading rally," BofA analysts said.

Early on Monday, S&P 500 futures edged up 0.3 per cent to 4,152, following Friday's sharp retreat, while Nasdaq futures added 0.5 per cent.

Risk appetite was dulled by Israel's push to surround Gaza's main city in a self-declared "second phase" of a three-week war against Iranian-backed Hamas militants.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 per cent, having hit a one-year low last week.

Japan's Nikkei fell 1.0 per cent amid speculation the Bank of Japan (BOJ) might tweak its yield curve control (YCC) policy after its two-day policy meeting wraps up on Tuesday.

Many analysts expect the central bank will lift its inflation forecast to 2.0 per cent, but are unsure whether it will finally abandon YCC in the face of market pressure on bonds.

"Remaining uncertainty about the wage outlook, combined with stresses in global bond markets could prompt the BOJ to err on the side of caution, making our view that YCC will be scrapped a very close call," said analysts at Barclays.

"The BOJ could still opt to revise policy but less drastically, perhaps by raising the ceiling for 10-year yields as it did in July."

Abandoning YCC altogether would likely see Japanese bond yields rise and add to pressure on global markets already bruised by a vicious sell-off in U.S. Treasuries.

FED ALL DONE?

Yields on 10-year Treasuries stood at 4.87 per cent on Monday, having climbed 30 basis points so far this month and touched 16-year peaks at 5.021 per cent.

Sentiment will be tested further on Monday when Treasury announces its refunding plans, with more increases likely. NatWest Markets expects $885 billion of marketable borrowing in the fourth quarter and $700 billion in the following quarter.

The sharp rise in market borrowing costs has convinced analysts the Federal Reserve will stand pat at its policy meeting this week, with futures implying a 97 per cent chance of rates staying at 5.25-5.5 per cent.

The market has also priced in 165 basis points of easing for 2024, starting around mid-year.

"The Fed appears to have coalesced around the view that the recent tightening in financial conditions led by higher long-term interest rates has made another hike unnecessary," said analysts at Goldman Sachs, who estimated the rise in yields was the equivalent of 100 basis points of rate increases.

"The story of the year so far has been that economic reacceleration has not prevented further labor market rebalancing and progress in the inflation fight," they added. "We expect this to continue in coming months."

Job figures due Friday are forecast to show U.S. payrolls rose a still solid 188,000 in October, after September's blockbuster gain, but annual growth in average earnings is still seen slowing to 4.0 per cent from 4.2 per cent.

The Bank of England is also expected to stay on hold this week, with markets pricing around a 70 per cent chance it is done tightening altogether.

Oddly the ascent of U.S. yields has not helped the dollar any higher recently.

"Likewise, the fall in global equity markets and the ongoing uncertainty around the Hamas-Israel conflict has not done much to drive the dollar higher against risk-sensitive currencies," Capital Economics analysts wrote in a note.

"This reinforces our sense that a relatively optimistic assessment of the outlook in the U.S. is by now largely discounted in the dollar."

The dollar was steady against a basket of currencies at 106.580 , having bounced between 105.350 and 106.890 last week. It firmed a touch on the yen to 149.77 , but remained short of last week's top of 150.78.

The euro idled at $1.0563 , and is almost unchanged on the month so far.

In commodity markets, gold was steady at $2,003 an ounce .

Oil prices eased as worries about demand outweighed risks to Middle East supplies, at least for the moment.

Brent lost 96 cents to $89.52 a barrel, while U.S. crude fell $1.00 to $84.54 per barrel.