* Asia stocks rise 0.6 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.
European stock markets <> were expected to open
slightly firmer on Asian and U.S. gains, with energy shares
supported by rising oil prices.
Crude oil futures held above $82 a barrel on Tuesday after
reaching the highest level in almost two weeks the previous day
on optimism about the global economic recovery and ahead of key
U.S. inventory data.
Markets were also underpinned 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 its recovery
going. []
Japan's Nikkei average <> climbed 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 $1.3483 <EUR=> after rebounding from a 10-month low below
$1.33 last week, mainly on short covering ahead of the
quarter's end.
The euro was also supported by Greece's successful sale of
5 billions 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 dollars, with the dollar
index <.DXY> against major currencies slipping 0.16 percent.
Analysts, however, said the dollar's weakness was likely to
be short-lived.
"The key this year is that fiscal stimuluses have to be cut
back," said Kevin Scully, executive director at NRA Capital in
Singapore. "They have to fund this somehow, they have to raise
rates. So the dollar will strengthen, the euro will flatten
out."
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 Asian trade, but underlying
strength was seen likely to stay on improving demand.
Led by resources-linked shares, the benchmark Nikkei closed
up 1 percent at 11,097 points, 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."
With one trading day left in March, the Nikkei has gained
about 5 percent for the quarter as investors were drawn to its
relatively inexpensive valuations, bringing its gains for the
financial year ending on Wednesday to more than 36 percent.
Across Asia, the materials sub-sector of the MSCI Asia
ex-Japan index <.MIAPJMT00PUS> was up over 1.2 percent,
compared to a 0.57 percent rise in the overall index
<.MIAPJ0000PUS>.
BHP Billiton <BHP.AX><BLT.L> and Vale <VALE5.SA>, the No. 3
and No. 1 iron ore producers in the world respectively,
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 Aussie
dollar <AUD=D4> up almost a cent, its biggest one-day rally in
six months.
The Aussie was also well-supported by growing talk of
another central bank interest rate hike next week as higher
prices of exports like iron ore promise a big boost to the
economy. [ID:nSGE62S0L9
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, but far
larger gains have been seen in some Southeast Asian sovereign
debt, which have also benefited from appreciating local
currencies.
The JPMorgan GBI-EM broad index on Indonesia is up 11
percent so far this year in dollar terms, according to Thomson
Reuters data.
(Editing by Kim Coghill)
