* 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
* Kiwi hits 6-yr low after rates slashed to record low
(Repeats to more subscribers, updates prices)
By Eric Burroughs
HONG KONG, Jan 29 (Reuters) - Asia stocks and the dollar
climbed on Thursday 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.
European shares were also expected to edge higher, buoyed
by Asian and U.S. gains.
Government bonds slid and U.S. benchmark yields hit a
six-week peak after the Federal Reserve laid out conditions for
buying Treasuries as part of its aggressive policy 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 the stimulus plan
in President Barack Obama's first legislative achievement since
taking office last week. Debate now shifts 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> rose 1.3 percent, pulling further away from a
six-week low struck last week.
But regional gains were relatively muted compared with a
3.4 percent rally in the U.S. S&P 500 <.SPX>.
Japan's Nikkei average <> rose 1.8 percent, shrugging
off more news highlighting the damage from the global recession
and soaring yen.
Nippon Steel <5401.T> was flat on the day, lagging broader
market gains after cutting its profit outlook by a
bigger-than-expected 36 percent on slumping car sales.
[]
Electronics and entertainment conglomerate Sony <6758.T>
swung to a quarterly loss and reiterated its forecast for the
first annual loss in 14 years, highlighting slumping demand
facing businesses around the world as recession-weary consumers
slash spending. []
"Everybody knows many earnings will be losses, so with more
and more companies announcing, it seems as if most of the bad
news is out now -- especially for exporters and electronics
firms," said Hideyuki Ishiguro, a supervisor in the investment
advisory department at Okasan Securities.
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.
Hong Kong's Hang Seng index <> jumped 5.4 percent,
catching up with a broad rally in global stocks this week.
But of major world stock markets, Hong Kong and Tokyo are
among the two worst performers so far in 2009 with declines of
7-8 percent.
FED HELPS DOLLAR
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.
Worries that the Fed's efforts to boost its balance sheet
will devalue the world's top reserve currency have dogged the
dollar since the central bank cut rates to virtually zero in
December.
The euro dipped 0.3 percent to $1.3111 <EUR=>, but the
dollar shed 0.5 percent to 89.83 yen <JPY=>. The dollar's broad
rise nudged gold prices down $3.75 an ounce to $881.85 <XAU=>.
The New Zealand dollar tumbled 1.6 percent to $0.5159
<NZD=D4> and hit a six-year low of $0.5146 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 7/32 in
price to yield 2.691 percent, up about 2 basis points on the
day and reaching a peak of 2.700 percent.
The slide in Treasuries pushed Japanese government bonds
lower, lifting the benchmark 10-year yield <JP10YTN=JBTC> 1
basis points to 1.265 percent.
JGBs trimmed some losses after a solid auction of two-year
paper drew the best demand in five months despite the 0.4
percent coupon being the lowest since 2006, as investors see
the Bank of Japan keep rates near zero for many months.
U.S. crude oil prices dipped 59 cents to $41.57 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 and Elaine
Lies in Tokyo; Editing by Kim Coghill)
