LONDON/TOKYO - An Asia stocks rally lifted world indices to record highs on Monday, and the dollar pared recent gains.

MSCI's broadest index of world shares climbed 0.2 percent to a record high of 893.88, as European indices steadied and Asian markets closed higher. The Japanese Nikkei closed almost 1 percent higher. 

Wall Street stocks had closed sharply higher on Friday after the closely watched monthly US jobs data eased concerns about damage to the world's biggest economy from Trump's unpredictable tariff regime.

Sentiment was also weighed down by a standoff in Los Angeles that led to Trump calling in the California National Guard to quell demonstrations over his immigration policies.

The dollar fell 0.5 percent against the yen to 144.09 , trimming its 0.9 percent jump on Friday. The European single currency rose 0.2 percent to $1.1422. Sterling traded at $1.3568, up almost 0.4 percent.

Attention now turns to US inflation data on Wednesday that may adjust expectations for the timing of any rate cuts by the Federal Reserve. The Fed is in a blackout period ahead of its June 18 policy decision.

"Markets have entered a tactical pause following a strong May, but beneath the surface, fragilities are building," said Bruno Schneller, managing director at Erlen Capital Management, noting that the US CPI release is expected to show another rise, signaling that inflation remains sticky.

"While this may offer some near-term support for the US dollar, broader macro dynamics – notably fiscal expansion, rising structural deficits, and political unpredictability – are increasingly clouding the outlook for both rates and currencies," he said.

Gold rose around 0.35 percent to $3,322 per ounce after a 1.3 percent fall on Friday. US crude fell 16 cents to $64.42 a barrel following a 1.9 percent surge late last week.