* Asia stocks rise 0.5 pct, led by commodity-linked shares
* Weaker dollar supports metal prices, oil
* Euro firm, but analysts see limited upside
* U.S. consumer spending up, supports recovery picture
By Raju Gopalakrishnan
SINGAPORE, March 30 (Reuters) - Asian stock markets rose on
Tuesday as the weak U.S. dollar spurred overnight gains in
commodities, boosting commodity-linked stocks in the region.
Markets were also buoyed by news that U.S. consumer
spending rose for a fifth straight month in February, implying
that its consumption may be strong enough to keep a global
economic recovery going. []
Japan's Nikkei average <> soared to an 18-month high,
and looked set to extend gains in the new business year and
quarter starting this week despite worries that it was
overbought.
The euro was trading more or less flat against the dollar
at $1.3479 <EUR=> after rebounding from a 10-month low below
$1.38 last week, mainly on short covering ahead of the
quarter's end.
The euro was also supported by Greece's successful sale of
5 billion euros ($6.7 billion) of bonds, the first test of
investor appetite since European powers last week agreed to a
financial safety net for Athens as its battles a debt crisis.
[]
The dollar was also weaker against commodity currencies
like the Australian and New Zealand dollar, with the dollar
index <.DXY> against major currencies slipping 0.12 percent.
The euro's strength took three-month copper on the London
Metals Exchange to its highest level overnight since August
2008. Prices retreated slightly in early Asian trade, but
underlying strength was seen likely to stay on improving
demand.
The benchmark Nikkei was up 0.5 percent at 11,038 points at
the midday break, after earlier rising as far as 11,062.09, its
highest since October 2008.
"The next quarter is likely to see the Nikkei boxed into a
10,000-11,500 range," said Yutaka Miura, chief technical
analyst at Mizuho Securities.
"It's risen quite a lot recently on hopes for global
economic recovery and good Japanese results, but if these don't
live up to expectations there could be some short-term
profit-taking."
As of Monday's close, the Nikkei had gained roughly 4.2
percent for the quarter as investors were drawn to its
relatively inexpensive valuations, bringing its gains for the
financial year ending on Wednesday to 35 percent.
The Nikkei's relative strength index (RSI) is at 68,
nearing the 70-plus levels which are considered overbought. But
other movement indicators, such as MACD, suggest the Nikkei is
still in an uptrend.
Commodities-linked shares climbed after gold hit its
highest in more than a week on Monday as investors' risk
appetite increased, while other metals rose sharply as economic
optimism boosted demand for industrial commodities.
Mitsubishi Corp <8058.T> gained 3.6 percent and steelmakers
like Kobe Steel <5406.T> also surged.
Across Asia, the materials sub-sector of the MSCI Asia
ex-Japan index <.MIAPJMT00PUS> was up 0.75 percent, compared to
a 0.52 percent rise in the overall index <.MIAPJ0000PUS>, with
portents of more gains to come.
BHP Billiton <BHP.AX><BLT.L> and Vale <VALE5.SA> persuaded
steel mills to buy iron ore based on a quarterly pricing system
as of April 1, signalling the near-demise of annual fixed-price
contracts that have cost miners billions of dollars.
The news augurs well for mining stocks, including World No.
2 producer Rio Tinto <RIO.AX>, which has also said it hopes to
replace annual prices with shorter ones this year.
Analysts were also excited by reports that major Japanese
and South Korean steel mills had agreed to a price increase of
90 percent for iron ore this year, which pushed the
commodities-linked Aussie dollar <AUD=D4> up almost a cent, its
biggest one-day rally in six months.
Market performance in Asia in the first quarter has been
mixed, with the Asia ex-Japan stock rally largely stalling
after surging 68 percent in 2009, held back by worries that the
global economic recovery and a rebound in corporate profits may
sputter.
The MSCI Asia ex-Japan equities index has gained a scant 2
percent so far this year, prompting investors to shift into
regional bonds, especially high-yield and riskier credits.
The benchmark JPMorgan EMBI+ credit index for Asia
<ASIEMBIP=JPMO> rose 2.8 percent in the first quarter, with far
larger gains seen in some Southeast Asian sovereign debt.
The JPMorgan GBI-EM broad index on Indonesia is up 11
percent so far this year in dollar terms, according to Thomson
Reuters data.
Oil steadied above $82 a barrel after hitting its highest
level in almost two weeks on Monday on optimism about the
global recovery, while gold <XAU=> inched up 35 cents to
$1.108.55 an ounce.
(Editing by Kim Coghill)
