TOKYO (Dow Jones)--The euro rose against the dollar and the yen Monday in Asia as investors took cues from Japanese and Chinese share markets, which rose despite an interest-rate hike in China over the weekend. Many in the currency market expected Asian share prices to fall after China hiked rates Saturday. A tighter Chinese monetary policy often damps investor sentiment due to concerns it could restrict global economic growth. But contrary to market expectations, Japan's benchmark Nikkei 225 Stock Average was up 0.82% as of 0450 GMT, while China's Shanghai Composite Index was 0.70% higher. These moves prompted investors to buy back euros sold earlier in the day, dealers said. "The market is still risk-on," said Tsutomu Soma, a senior dealer at Okasan Securities. The euro was at Y108.78 at 0450 GMT from Y108.52 at 2350 GMT, and at $1.3129 from $1.3093. Dealers said financial market reactions to China's decision were muted as it had been completely factored in. "Given China's high inflation rate, everybody knew it was coming," said Jun Kato, a senior dealer at Shinkin Asset Management. It was the second time the People's Bank of China raised rates in the past two months, and it followed November's consumer price rise of 5.1%. For the remainder of the global day, investors expect trading to be quiet with London closed for holiday and many traders in the U.S. on year-end leave. But because the number of participants is so small and the market so thin, they warned of sudden sharp moves as a result of the exaggerated impact of even small trades. The greenback was at Y82.88 from Y82.92, and the ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at 80.439 from 80.637.

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