* MSCI Asia ex-Japan index biggest weekly rise since Nov
* Nikkei hits 2-1/2-month intraday high
* Questions remain about sustainability of equity rally
(Repeats to additional subscribers with no change to text)
By Kevin Plumberg
HONG KONG, March 27 (Reuters) - Asian stocks rose on
Friday, trying for a fifth day of gains, as hopes the global
economy could not get any worse kept investors buying riskier
assets, though U.S. and Japanese data left some doubts
lingering.
U.S. crude prices took a breather, trading around $54 a
barrel <CLc1>, after climbing global equity markets and a rosy
outlook for demand from China broadly lifted raw materials
prices, particularly industrial metals.
Investors appeared to be latching on to the view that mixed
economic data, as opposed to completely horrible, was enough
motivation to pick up stocks at low valuations and lock in
yields on heavily discounted bonds.
They also have been heartened by further clarity on rescue
efforts for U.S. banks, though whether any policy would
ultimately be successful in stimulating global demand in the
near term was anyone's guess.
"Asia has a lot to gain with the U.S. looking better. Now
whether the U.S. really is better is another question," said
Tim Rocks, equity strategist with Macquarie Securities in Hong
Kong.
"In China you have some evidence stimulus policies are
working, but whether that's enough and whether we take another
leg down is still unclear."
Japan's Nikkei share average <> rose 1 percent after
earlier touching a 2-1/2-month high. Car makers and exporters
of technology, such as Honda Motor Co <7267.T> and Canon Inc
<7751.T>, were among the biggest boosts to the index.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up 0.5 percent, heading for the largest
weekly rise since early November.
A sanguine outlook for demand and higher metals prices
supported mining stocks and provided the main thrust to
Australia's benchmark S&P/ASX 200 index <>, which climbed
0.8 percent.
BHP Billiton <BHP.AX> gained 0.4 percent while rival Rio
Tinto <RIO.AX> outperformed the broad market, racing up 4.1
percent.
"We've hit the bottom, we're making our way up," said
Stuart Smith, a Bell Potter Securities private client advisor
in Australia.
ARE WE REALLY AT THE BOTTOM?
The "R" word used more frequently among fund managers and
dealers has been recovery rather than recession, especially
with the MSCI all-country world index <.MIWD00000PUS> climbing
more than 20 percent in the last three weeks.
However, the picture painted by economic data was far from
clear.
A gauge of U.S. capital spending unexpectedly spiked in
February, though the number of workers continuing to collect
state unemployment benefits climbed to a record.
[]
In Japan, the world's second largest economy, contracting
consumer prices beckoned deflation and deepening recession
while a larger-than-expected fall in February retail sales were
more signs of gloom. []
"We expect negative numbers for at least the rest of this
year due to a combination of weaker energy prices and a
deterioration in the output gap. Japanese companies are still
producing more than consumers want to buy," said Akira Maekawa,
senior economist with UBS in Tokyo.
Dealers in the Japanese government bond market were more
concerned with the Nikkei's persistent rise, which kept a lid
on the bond market. The 10-year JGB future <2JGBv1> was down
0.03 point after earlier hitting a one-month low.
The yield on the benchmark 10-year U.S. Treasury note
<US10YT=RR> was steady at 2.75 percent. Overnight, Treasuries
rose in a relief rally after a auction of seven-year notes saw
respectable demand, cooling fears of a failed auction like
Britain had earlier in the week.
In New Zealand, government bond yields eased slightly after
a surging the previous day which prompted the central bank to
deny talk it was holding an emergency meeting over the two-week
long selloff in the debt market. The key five-year swaps rate
<NZSM6NB5Y=> also eased slightly to around 4.99 percent from
5.02 percent.
The ABF pan-Asia government bond exchange traded fund
<2821.HK> was up 1 percent.
With the fiscal year end approaching, Japanese businesses
were bringing some overseas cash home, putting upward pressure
on the yen. The dollar was down 0.3 percent to 98.38 yen
<JPY=>.
The euro <EUR=> was up 0.2 percent to $1.3554, still up
more than 5 cents since the Federal Reserve said it would
greatly increase purchases of long-term securities to support
the economy.
U.S. light crude slipped 0.9 percent to $53.85 a barrel on
Friday, after having touched a 2009 high in the previous
session on stronger equities, which the market hopes signal a
recovery in energy demand down the road.
