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* Japan c.bank mulls more monetary easing, but not just yet
* BHP continues to drag down regional index on take-over
bid
* Gold just short of its highest level since July
By Sanjeev Miglani
SINGAPORE, Aug 19 (Reuters) - Asian stocks rose on Thursday
on hopes that a surge in U.S. mortgage applications will shore
up a faltering recovery, while the yen hobbled on reports that
the central bank was considering steps to contain its
export-sapping rise.
European stock markets rose in early with major shares up
0.3 percent <>, following a positive finish on Wall
Street and gains in Japan's Nikkei <> which closed up 1.32
percent.
The markets were looking for further cues from the weekly
U.S. jobless claims and British retail sales due later on
Thursday, seeking evidence that an economic recovery was
continuing apace.
"The whole world is sort of holding its breath to see what
happens especially in the States, if consumption picks up,
though you have to wonder if that's a good thing. There are
lots of open-ended questions, that's the problem," said Alex
Boggis at Aberdeen Asset Management.
U.S. growth slowed in the second quarter, sparking fears
the country might suffer a double-dip recession after climbing
out of the worst economic slump since the Great Depression.
A jump in mortgage applications with demand for home
refinancing at their highest level in 15 months and sales
forecast from discounter Target Corp boosted hopes of stronger
economic growth, lifting Wall Street overnight.
Shares in Asia outside of Japan <.MIAPJ0000PUS> picked up
the thread, advancing 0.75 percent, helped by demand for
consumer stocks reflecting Asia's stronger economic growth
compared with other regions. The MSCI ex-Japan sub-index of
consumer discretionary stocks was up 1.3 percent, taking its
gains for the year to date to nearly 11 percent.
Seoul shares rose for a third straight session on Thursday
to end above a key support level as investors snapped up stocks
such as Hyundai Motor <005380.KS> and Hynix <000660.KS> on
subsiding economic worries.
The Indian bourse also pulled up the MSCI index with shares
climbing 0.8 percent to 30-month highs on robust domestic
growth and firm global markets.
But traders said the market was vulnerable to a correction
with valuations running high, even though the economy, Asia's
third largest, is expected to expand 8.5 percent this year, the
fastest pace among major economies after China.
JAPAN OUTPERFORMS, YEN WEIGHS
Japan's benchmark Nikkei <> rose 122.14 points to
9,362.68, buoyed by short-covering and bargain-hunting by
domestic investors after falls earlier this week, but the yen's
overall strength against the dollar capped further gains.
"The Nikkei remains at a precarious level. If U.S. stocks
were to slide on some negative news again, the index could
easily go below 9,000," said Kenichi Hirano, operating officer
at Tachibana Securities.
Investors wait for a meeting between Prime Minister Naoto
Kan and Bank of Japan Governor Masaaki Shirakawa.
A newspaper report triggered speculation that the central
bank may ease monetary policy further ahead of the meeting,
which is expected to take place on Monday.
However, sources familiar with the BOJ's thinking later
said the central bank was lining up its options for its policy
meeting early next month, but was in no rush to act now.
[]
The most likely option under consideration is expanding the
BOJ's fund-supply tool introduced in December, Japan's Sankei
newspaper said, without citing sources. The December move
helped push down money market rates and subsequently weaken the
yen after it hit a 14-year high.
The dollar, appeared to draw some strength from the
newspaper report, edging up 0.3 percent to 85.74 yen <JPY=>,
pulling away from a 15-year low of 84.72 hit last week.
The euro slipped after a report on the website of German
newspaper Der Spiegel that austerity steps to fix Greece's debt
problems are damaging its economy, but falls in the euro were
seen limited as the report provided few fresh insights.
[]
The euro fell 0.4 percent to $1.2805 <EUR=> and support for
it is seen at the 100-day moving average of $1.2776, while
rises could be capped around $1.2900, said a trader at a
Japanese bank. The Australian dollar drifted lower on
Thursday, as some market players saw uncertainty over the
country's election as an excuse to sell into recent gains amid
cautious support for risky trades as equities struggled.
Oil was under pressure on Thursday from a stronger dollar
and brimming U.S. petroleum inventories, after prices rebounded
from a six-week low a day earlier with rising stock markets.
U.S. crude for September <CLc1> dipped 11 cents to $75.31 a
barrel, after touching $73.83 on Wednesday, the lowest price
since July 7.
U.S. commercial crude and product inventories rose last week
to the highest level since the U.S. government began tracking
weekly data, statistics showed, a sign fuel supply is outpacing
demand amid a slow U.S. economic recovery.
Gold gained on Thursday after holdings in SPDR Gold Trust
<GLD.P> rose again, showing that the safe-haven appeal of the
metal remained intact amid volatile equities markets.
Spot gold <XAU=> added $1.35 an ounce to $1,228.90 an ounce
by 0052 GMT. It had rallied to $1,232.35 an ounce on Wednesday,
its strongest since early July, on technical buying and strong
physical demand.
(Additional reporting by Kaori Kaneko in Tokyo; Editing by
Tomasz Janowski)
