Asian stocks held tight ranges on Monday as worries over flaring tensions between the US and China weighed on sentiment although signs of a recovery in industrial activity in the world's second-largest economy capped losses.

MSCI's broadest index of Asia-Pacific shares outside Japan see-sawed between red and green, but held in small ranges to stay below a 6-1/2 month peak touched last week.

Trading was expected to be light with Japanese and Singaporean markets closed for public holidays.

Chinese shares started lower with the blue-chip CSI300 down a shade and Hong Kong's Hang Seng index falling 0.2 per cent.

While deteriorating Sino-US relations hung heavy on sentiment, data showing a slowing in China's factory deflation boosted hopes of economic recovery in the world's second biggest economy.

China's industrial output is steadily returning to levels seen before the pandemic paralysed huge swathes of the economy, as pent-up demand, government stimulus and surprisingly resilient exports propel a recovery.

Investors were circumspect after US President Donald Trump signed two executive orders banning WeChat, owned by Chinese tech giant Tencent, and TikTok in 45 days' time while announcing sanctions on 11 Chinese and Hong Kong officials.

Rounding out the actions, US regulators recommended that overseas firms listed on American exchanges be subject to US public audit reviews from 2022.

“The bigger question for markets is whether these actions jeopardise the US-China trade talks on August 15 and markets will be looking closely for any Chinese retaliation,” said Tapas Strickland, director of markets & economics at National Australia Bank.

“The running assumption in markets has been President Trump needed the phase one deal to succeed, as much as China, this side of the November elections... At the same time President Trump is running a hard China line into the elections,” Strickland added.

Australian shares bucked the trend to rise 1.2 per cent, while South Korea's KOSPI index jumped 0.9 per cent. New Zealand's benchmark index was barely changed.

In currencies, the dollar fell against the safe haven Japanese yen to 105.78, while the risk sensitive Aussie dollar nursed its losses after falling 1.1 per cent on Friday.

The British pound rose slightly to $1.3073 but was still below a five-month high of $1.3185 touched last week. The euro was 0.1 per cent higher at $1.1795, to hover near its highest since May 2018.

That left the dollar index at 93.30, having struggled on a slippery slope since late June.

Weighing on the greenback is uncertainty over US fiscal stimulus after President Trump signed a series of executive orders to extend unemployment benefits after talks with Congress broke down.

The orders would provide an extra $400 per week in unemployment payments, less than the $600 per week passed earlier in the crisis.

While analysts see the move as a cut to spending that leaves homeowners and renters vulnerable to eviction, they are still optimistic about the prospects for more stimulus.

“I view this as another step in negotiations rather than a cessation of negotiations, with a still unknown timeline,” JPMorgan analyst Andrew Tyler wrote in a note.

“If we see the White House take the view that they no longer want to negotiate until after the election, then think we'll see a wave of GDP downgrades followed by lower realized spending and spikes to unemployment in September through year-end.”

In commodities, gold held on to gains at $2,030 an ounce after hitting an all-time high of $2,072.5 last week.

Oil prices were higher with Brent crude rising 40 cents to $44.80 a barrel. US crude added 46 cents to $41.68.

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