The dollar rose against other currencies on Monday following news that North Korean leader Kim Jong-Il had died, which sparked worries over instability in the reclusive state.

The greenback gained ground as market players digested the announcement from North Korean state television that he had died on Saturday.

The dollar bought 78.00 yen in Tokyo early afternoon trade, up from 77.81 yen in New York late Friday. The euro fell to $1.2988 from $1.3032 while staying almost flat against the Japanese currency at 101.32 yen.

The South Korean won tumbled to 1,177.60 to the dollar from 1,156.90 on Friday.

Market players are concerned his son and likely successor Kim Jong-Un, who is in his late 20s, is 'too young' and 'inheriting a very difficult situation,' which could lead to instability in relations with China and Japan, said a senior dealer at a bank in Singapore.

Traders were nonplussed by the news that European finance ministers would hold a conference call later in the day.

"We can't expect much, or even something more positive for the euro from the meeting," a senior dealer at a major bank in Tokyo said.

The only plausible euro-positive factor would be the European Central Bank buying more Italian bonds, but that is not likely to happen for the time being. "The euro has only one way to go: down," he told Dow Jones Newswires.

Eurozone finance ministers will hold talks to flesh out euro-saving plans made at a Brussels summit this month.

With several bloc members facing the threat of downgrades, a key focus of the telephone conference will be boosting International Monetary Fund (IMF) coffers to enable it to come to the aid of floundering economies.

At the recent summit, which saw Britain block plans for an EU treaty change to save the currency, member countries announced plans to pump 200 billion euros ($260 billion) into an IMF warchest.

Tokyo stocks open down 1.34% early afternoon
Tokyo stocks lost 1.34 percent by early afternoon on Monday following the announcement that North Korean leader Kim Jong-Il had died.

The Nikkei 225 index at the Tokyo Stock Exchange lost 112.57 points at 8,289.15. The Topix of all first section shares fell 1.29 percent or 9.32 points to 714.24.

The official Korean Central News Agency (KCNA) said the leader 'passed away from a great mental and physical strain' at 8:30 am on Saturday (2330 GMT Friday), while on a train for one of his 'field guidance' tours.

KCNA said Kim died of a 'severe myocardial infarction along with a heart attack," sending Seoul stocks down nearly five per cent.

European sovereign debt problems also weighed on the Tokyo market, said Hiroichi Nishi, general manager of the equity division at SMBC Nikko Securities.

On Friday, Moody's Investors Service downgraded Belgium's credit rating by two notches.

Fitch Ratings lowered its outlook on France's triple-A rating to negative from stable and placed six eurozone nations, including Spain and Italy, on watch for downgrade.

"Downgrades don't really surprise us these days, but they will still weigh on sentiment," Nishi told Dow Jones Newswires.

Eurozone finance ministers will hold talks on the debt crisis later Monday to flesh out plans made at a Brussels summit this month to save the European currency.

With several members under threat of downgrades, a key focus of the telephone conference will be boosting International Monetary Fund (IMF) coffers to enable it to come to the aid of floundering economies.

Growth-sensitive stocks continued to underperform as investors fretted about the darkening global growth outlook.

Sony fell 2.94 percent, Sharp lost 0.43 percent and Nintendo dropped 2.92 per cent. But Nissan Motor soared 3.44 per cent after announcing it will make its subsidiary Aichi Machine into a wholly owned unit.

"While its competitors are floundering, Nissan is steadily taking steps to become more competitive and position itself for growth," analysts at Credit Suisse write in a client report.

"The greater freedom Nissan seems to have compared to its competitors is positive," it said.

The euro bought $1.3014 and 101.43 yen in Asian trade Monday, compared with $1.3032 and 101.37 yen in New York late Friday. The dollar was also almost flat against the Japanese currency, trading at 77.83 yen.

S. Korean shares fall after Kim's death
South Korean shares tumbled 4.87 percent soon after the announcement that North Korean leader Kim Jong-Il had died.

The benchmark KOSPI fell 89.36 points to 1,750.60 minutes after the news before edging back up slightly.

North Korean state media said on Monday that the 69-year-old died of a heart attack on Saturday, plunging the impoverished nation into uncertainty.

The official Korean Central News Agency (KCNA) urged people to follow Kim's youngest son and heir apparent Kim Jong-Un, who is aged in his late 20s.

The North declared a period of national mourning from December 17 to 29. South Korea's government went on an emergency footing after the shock news, the South's Yonhap news agency reported. It summoned a meeting of the National Security Council.

Deputy Finance Minister Choi Jong-Ku said authorities in Seoul would monitor financial markets.

The US dollar jumped to 1,199.00 Korean won after the news of Kim's death, from 1,164.30 before. It later eased to 1,175.90.

"Uncertainty is mounting, as there are worries over the direction of North Korea and its leadership," Ichiyoshi Investment Management fund manager Mitsushige Akino said.

"Investors are simply in a rush to liquidate their positions," he told Dow Jones Newswires.

North and South Korea have remained technically at war since the three-year Korean conflict ended only in an armistice in 1953 and tensions between the two have been strained further since Pyongyang tested nuclear bombs in October 2006 and May 2009.

There have been diplomatic efforts to restart six-nation nuclear disarmament talks which the North abandoned in April 2009.

"The shock on the market will be inevitable in the short term," Hyundai Securities analyst Bae Sung-Young said.

"Judging from the past cases, I forecast the impact to last for two to three days only, but at the same time, this time it could be different since the leader's death came when the succession process still looks incomplete," he said.

Hong Kong shares down 2.47% by lunch
Hong Kong shares tumbled 2.47 per cent by the break on Monday as news that North Korean leader Kim Jong-Il had died added to fears over the eurozone debt crisis.

The benchmark Hang Seng Index fell 451.97 points to 17,833.42 on turnover of HK$23.19 billion ($2.95 billion).