HONG KONG, Aug 11 (Reuters) - The dollar hit a six-month high against the euro and most Asian stocks rose on Monday as oil prices held more than $20 below an all-time high and a view gained ground that the U.S. dollar's long-term decline is nearing an end.

Military conflict between Russia and Georgia ignited fears the clash would disrupt energy exports from the Caspian region, nudging oil prices back above $116 a barrel and pushing up U.S. Treasury debt prices.

Japanese government bond prices also edged up, suggesting the rally in equities thinly covered darker fears that the impact of the U.S. economic slowdown on the rest of the world may have been underestimated.

However, the key issue remained the direction of oil prices.

"The dollar has been strengthening due to a deterioration in economic data outside of the U.S. coupled with low oil prices," said Ashley Davies, currency strategist with UBS in Singapore.

"If oil were to start creeping higher again in the absence of clear fundamentals, it would raise the risk of a partial reversal of recent moves," he said in a note.

The euro fell to a six-month low of $1.4908 before recovering slightly to around $1.5042 by 0945 GMT. It has plunged around 6 cents in the last week.

The dollar eased 0.5 percent to around 109.80 yen, having hit a seven-month high around 110.40 earlier.

On a trade-weighted basis, the U.S. dollar on Friday rose to a 2008 high against seven major currencies, Federal Reserve data showed.

Oil prices crept above $116 a barrel on worries about the implications of the Georgia conflict. Oil hit a three-month low of $114.62 a barrel on Friday.

After hitting an all-time high of $147.27 a barrel in July front-month U.S. light crude has tumbled 21 percent on fears about slower demand from developed economies fighting against looming recessions.

Gross domestic product data due this week for the euro zone and Japan could renew such fears, particularly with both economies expected to contract on a quarterly basis.

LOOKING FOR A BOTTOM

Japan's Nikkei share average rose 2 percent to close at its highest level in three weeks, boosted by gains in shares of high-profile exporters, such as Honda Motor Co and Canon Inc.

Outside Japan, Asia-Pacific stocks were up 0.7 percent by 0943 GMT, though they remain down 23 percent on the year.

Taiwan stocks gained 1.6 percent to a two-week closing peak, led by tech exporters such as electronics parts maker Hon Hai.

Indian stocks closed 2.2 percent higher, led by Reliance Industries and ICICI Bank.

Australian, Korean and Singapore shares rose between 0.6 and 0.8 percent.

But China's Shanghai Composite Index fell more than 5 percent to a 19-month low, hit by concerns over slowing economic growth and rising producer price inflation.

Hong Kong stocks ended flat, surrendering earlier gains, in sympathy with the tumbling mainland market.

In the past several weeks, however, investors have been sending their money to countries where growth has a higher chance of bottoming in the near term, such as China and the United States.

Last week, U.S. equity funds took in fresh capital for the ninth time in the last 11 weeks, during which time they absorbed a net $12.8 billion, according to EPFR Global, a Boston-based research firm that tracks $10 trillion in assets.

Investors also took money out of Japan and Europe equity funds last week, with net outflows from Japan for the year-to-date totalling $5.6 billion.

Japanese government bonds and U.S. Treasuries advanced, with the benchmark 10-year JGB yield falling to a new four-month low as persistent concerns about global growth overshadowed solid gains in Tokyo shares.

"Worsening economic prospects, especially for the domestic economy, are persistently strong," said Atsushi Ito, fixed-income strategist at Morgan Stanley in Tokyo.

The 10-year yield, which moves in the opposite direction of the price, touched a four-month low of 1.455 percent.

The 10-year U.S. Treasury yield ticked down to 3.93 percent from 3.94 percent late Friday in New York.

The tone of comments from policymakers remained downbeat, with their focus on the crippling combination of rising inflation and deteriorating growth.

The permanent secretary at the Singaporean trade ministry said Asian economies will not do as well as previously expected. Data on Monday showed Singapore's gross domestic product shrank by an annualised rate of 6 percent in the second quarter.

In a statement on monetary policy, Australia's central bank said the economy looked to be slowing enough to significantly reduce inflation over time, providing a backdrop to ease interest rates from a 12-year high.