* S.Korean won hits 2-mth high, risk appetite slowly
returns
* Dollar falls; oil and gold jump after Israeli attacks
* Asia stocks dip, with banks and airlines weaker
* JGB 30-year yield plumbs 5-year low
(Refiles to correct spelling of Korean in headline)
By Eric Burroughs
HONG KONG, Dec 29 (Reuters) - The South Korean won struck a
two-month peak on Monday as a slow recovery in investor
appetite for risk boosted some Asian currencies, while oil and
gold prices surged on the flare-up of violence in the Middle
East.
The dollar took a hit from the jump in oil and gold prices
as the conflict between Israel and Hamas in the Gaza Strip
stirred worries about energy supply disruptions and prompted a
shift of funds into traditional safe-havens.
Asian stocks dipped for a second straight day, with bank
and financial shares weaker and energy-sensitive shares such as
airlines falling on the oil rebound.
Trading activity was limited before New Year's holidays.
Government bonds rose as investors see economies struggling
through next year and after central banks have chopped interest
rates aggressively, with the 30-year Japanese government bond
yield <JP30YTN=JBTC> hitting a five-year low of 1.775 percent.
Investors are grappling with a reality of a sharp global
slowdon and a huge hit to corporate earnings results next year,
but also the prospect of big government spending in 2009 to
revive growth.
Many portfolio managers remain cautious even as this year's
sell-off that has halved the value of Asian stocks, awaiting
more clarity on just how severe the blow to companies is going
to be.
"Rather than seeing a rebound on value, we want to see
companies that can deliver growth in an environment that we
have got," said Steven Robinson, a fund manager with Alleron
Investment Management in Sydney.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> dipped 0.2 percent, with this year's losses
totalling 55 percent -- by far the biggest yearly slide since
the index began in 1988.
In Japan, the Nikkei average <> dropped 0.8 percent on
the last full trading day of the year, pulling back from a
six-week closing high reached on Friday.
But Japanese non-life insurers jumped on news that Mitsui
Sumitomo Insurance Group Holdings <8725.T> was in talks to
merge with counterparts. []
The dollar fell across the board, suffering its biggest
losses against the safe-haven Swiss franc after Israeli
warplanes pounded the Hamas-ruled Gaza Strip for a third
consecutive day and prepared for a possible invasion after
killing more than 300 Palestinians. []
The dollar shed 0.8 percent to 1.0595 francs <CHF=>, while
the euro climbed 0.6 percent to $1.4145 <EUR=>.
The euro stuck an all-time peak against the British pound
at 96.315 pence <EURGBP=D4>, taking its closer to parity as
euro zone rates are poised to stay above those in the United
Kingdom.
As the U.S. currency retreated, gold prices jumped $15.60
an ounce, or nearly 2 percent, to $882.30 <XAU=> and hit an
11-week peak.
U.S. crude oil <CLc1> was up $1.55 a barrel to $39.26,
helping life shares of companies like Japan's Inpex Holdings
<1605.T>.
Despite the heightened caution and woes for other emerging
market countries, Asian currencies gained on the day.
The South Korean won -- the most battered regional currency
in the financial crisis -- climbed about 1 percent to 1,285.8
against the dollar <KRW=> and hit a peak of 1,269.9.
In government bonds, the 10-year JGB yield <JP10YTN=JBTC>
dipped half a basis point to 1.195 percent.
U.S. Treasuries were little changed, with the benchmark
10-year yield <US10YT=RR> steady at 2.135 percent -- holding 10
basis points above a five-decade low hit earlier in the month.
(Additional reporting by Yoo Choonsik in SEOUL and Denny
Thomas in SYDNEY; Editing by Lincoln Feast)
