* Asia stocks climb on coming U.S. stimulus, gains muted
* Treasuries extend losses as Fed shies away from buying
* Dollar buoyed by Fed, gold down
By Eric Burroughs
HONG KONG, Jan 29 (Reuters) - Asia stocks climbed on
Thursday while the dollar gained as investors took heart from
the U.S. Congress making headway on a $825 billion stimulus
spending package and other efforts to stem the financial
crisis.
Government bonds slid, with the benchmark 10-year U.S.
Treasury yield hitting a six-week peak after the Federal
Reserve shied away from buying Treasury debt yet as part of its
aggressive easing to relieve credit market strains.
The Fed said it was still mulling the extreme move to buy
Treasuries but would do so if it would help private credit
markets, emphasising its focus on bringing down borrowing rates
for consumers and companies through other asset purchases.
The U.S. House of Representatives passed an $825 billion
stimulus plan in President Barack Obama's first legislative
achievement since taking office last week, with the debate now
shifting to the Senate. []
"Investor sentiment has significantly improved after the
U.S. House passed the economic stimulus plan. The legislation's
passage points to a high likelihood that additional financial
rescue measures will be taken to help banks," said Lee
Sun-yeob, a market analyst at Goodmorning Shinhan Securities.
The move came as U.S. policymakers have begun talking more
openly about creating a bad bank to warehouse the toxic
mortgage-related assets still tainting the balance sheets of
major financial institutions.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up 1 percent, pulling further away from a
six-week low struck last week.
Gains were relatively muted following a 3.4 percent rally
in the U.S. S&P 500 <.SPX>.
Japan's Nikkei average <> rose 1 percent and was up 6
percent so far on the week.
Activity was limited with some countries still on holiday
for Lunar New Year. Financial markets in Hong Kong reopened
after a three-day break, but markets in China and Taiwan
remained closed.
The dollar edged up on relief the Fed chose not to buy
long-term Treasuries yet, suggesting the central bank was
showing some restraint on using its printing press to pump up
the economy.
The euro dipped 0.2 percent to $1.3125 <EUR=>, and the
dollar was steady at 90.35 yen <JPY=>. The dollar's rise nudged
gold prices down $1.70 an ounce to $883.90 <XAU=>.
The New Zealand dollar dropped 0.5 percent to $0.5215
<NZD=D4> after the country's central bank slashed rates by 1.5
percentage points to a record low 3.5 percent and left the door
open to more cuts to counter a deep recession. []
In bonds, 10-year Treasuries <US10YT=RR> dipped 1/32 in
price to yield 2.670 percent, little changed on the day after
reaching a five-week peak of 2.698 percent in early in early
Asia trade.
The slide in Treasuries pushed Japanese government bonds
lower, lifting the benchmark 10-year yield <JP10YTN=JBTC> 1.5
basis points to 1.270 percent.
U.S. crude oil prices dipped 16 cents to $42.00 a barrel
<CLc1> after data the previous day showed a drawdown in
distillate and gasoline inventories, while OPEC vowed to
implement steep supply cuts by the end of the month. []
(Additional reporting by Jungyoun Park in Seoul; Editing by
Tomasz Janowski)
