RPT-GLOBAL MARKETS-Asian shares gain; some see pullback ahead

                                
 * Asian shares extend gains, but some see pullback ahead
                                
 * Nikkei average down 0.7 on Toyota's steep losses
                                
 * Riskier currencies such as Australian dollar gain
                                
 * Oil retreats slightly from six-month high hit Friday
 (Repeats to additional subscribers with no change to text)
                                
 By Rafael Nam
                                
 HONG KONG, May 11 (Reuters) - Asian shares extended their
rally on Monday and riskier assets such as the euro held on to
recent gains, but warnings about an impending pullback are
growing amid weak corporate results and views that any global
recovery will only be gradual.
                                
 For now, traders focused on a smaller-than-expected number
of job losses in the United States that reinforced expectations
that the global economy, while still weak, may have hit bottom.
The data also helped steady oil prices at near a 6-month high
above $58 a barrel on Monday.
                                
 The rally in U.S. banking shares after the release of
results of stress tests in the sector is also supporting
expectations that conditions in the beleaguered U.S. financial
system are improving.
                                
 Risk premiums in Asian credit markets have plunged, in a
catch up to a spectacular equity rally that has sent the MSCI's
index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> up
52 percent since their post-financial crisis low hit in early
March.
                                
 But some analysts are warning markets may be due for a
pullback, given that corporate results remain weak, as seen by
the steep loss announced by Toyota Motor Corp <7203.T> on
Friday, while any recovery in the global economy is unlikely to
be swift.
                                
 "It is hard to see where the good news will come from going
forward," said Calyon analysts in a daily note to clients.
                                
 "The worst is likely over from an economic standpoint but
less negative is far from positive and at best we will see a
stabilisation in economic conditions by year end before a
gradual turnaround at the turn of the year."
                                
 The MSCI regional stock index not including Japan gained
0.4 as of 0225 GMT after having gained in each of the previous
five sessions. Current levels are still some 50 percent below
the record high for the index hit in early November 2007.
                                
 But Japan's Nikkei average <.N225> fell 0.7 percent,
weighed down by a 5 percent plunge in shares of Toyota after
the auto maker forecast a bigger-than-expected $8.6 billion
annual loss after the close of markets on Friday. [ID:nT35817]
                                
 "The market is finding it hard to keep surging after rising
some 30 percent from a March low. There's also a torrent of
earnings reports this week in Japan and that's keeping trade in
check," said Kenichi Hirano, operating officer at Tachibana
Securities in Japan.
                                
 Among other major indexes, Australian shares <.AXJO> fell
0.5 percent, but stocks in Hong Kong <.HSI> and Shanghai
<.SSEC> rose.
                                
 WORST OVER?
                                
 Helping inspire investors was data on Friday showing U.S.
employers cut a smaller-than-expected 539,000 jobs in April,
although the unemployment rate soared to 8.9 percent from 8.5
percent in March, the highest since September 1983.
[ID:nN08455623]
                                
 The shift towards risk has been especially evident in
regional credit markets where the cost of insurance against
defaults have fallen sharply, indicating increased confidence
especially in high-yield.
                                
 The Asia iTraxx index of "junk" bonds outside Japan
<0#ITAHYMPBMK=> has tumbled to below 800 basis points from the
1,200-1,300 points just at the end of March when the market was
still suffering from months of little to no liquidity.
                                
 Still, only higher-rated Asian issuers have been able to
sell debt this year, indicating some caution on the part of
investors.
                                
 Other markets are showing signs of improved demand for
risk. Safe-haven demand for the dollar has waned, with the U.S.
currency index <.DXY> on Monday holding close to a four-month
low set on Friday.
                                
 The New Zealand dollar climbed 0.4 percent to $0.6080
<NZD=D4>, its strongest in nearly five months, and the
Australian dollar <AUD=D4> gained to hit a seven-month peak at
$0.7714 before slipping to $0.7655.
                                
 The euro was steady at $1.3630 <EUR=> after brushing a
seven-week high at $1.3660 on trading platform EBS.
                                
 Oil has also benefitted from the improved confidence about
the global economy, sending futures prices to a six-month high
above $58 a barrel, up by around 70 percent from February lows
below $34.
                                
 On Monday, U.S. crude futures <CLc1> fell 53 cents to
$58.10.
                                
 Still, analysts are also warnings of a possible pullback,
especially in light of signs of rising inventories.
[ID:nN06284963]
                                
 "Oil prices are driven by perceptions that the economic
outlook is less pessimistic that previously thought. But the
growth numbers we could be seeing from developed economies may
not justify such price levels," said David Moore, a commodities
strategist at Commonwealth Bank of Australia.