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* MSCI Asia-ex Japan hits 10-mth peak but give up gains
* Policy accommodation needed for "extended period"
-Bernanke
* Dollar steady after slide, Aussie dips but near 5-wk high
* Nikkei up 1.4 pct, expected election eyed
By Eric Burroughs
HONG KONG, July 21 (Reuters) - Asian stocks scaled a
10-month peak on Tuesday after upbeat company earnings
reassured investors that a U.S. economic recovery is taking
root, prompting a further shift into riskier assets and away
from the safe-haven dollar.
Gains were kept in check as some market players booked
profits on the run-up in equities and higher-yielding
currencies, knocking the Australian dollar down from a
five-week high against the beleaguered U.S. currency.
Investors showed little reaction to comments from Federal
Reserve Chairman Ben Bernanke, who wrote in the Wall Street
Journal that accommodative policy would be warranted for an
extended period.
But Bernanke, who delivers his twice-yearly testimony to
Congress later in the day, also said the Fed will need to
tighten policy to prevent an inflation problem from emerging
once it becomes clear that an economic recovery is taking hold.
[]
"It doesn't look like he's sounding too anxious or urgent
about removing excess stimulus from the system," said Sue
Trinh, a senior currency strategist at RBC Capital Markets in
Sydney.
Stocks around the world have gained this month as major
banks show more signs of healing from the credit crisis and
companies are more optimistic about demand improving later this
year and in 2010.
Analysts said the last-minute deal by CIT Group <CIT.N> to
secure emergency financing also boosted investor confidence,
even as the drama surrounding the struggling U.S. commercial
lender has made few waves across markets.
"News of the CIT deal and positive economic data from the
United States helped markets start off quite strong," said Lee
Sun-yeop, a market analyst at Goodmorning Shinhan Securities in
Seoul. "Combined with a positive earnings outlook and growing
upward momentum, we are seeing shares hitting a new high for
the year."
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> edged up 0.1 percent after pushing up to 344.65
in early trade, the highest since late September when equity
markets were crumbling after the collapse of U.S. investment
bank Lehman Brothers.
So far this year the MSCI benchmark for Asia has risen 39
percent, rebounding from a record 53 percent plunge last year
and outperforming the gains in developed markets.
Equity indexes were mixed across the region, with Hong
Kong's Hang Seng <> dipping 0.5 percent and South Korea's
KOSPI <> edged up 0.4 percent.
On Monday the U.S. S&P 500 <.SPX> climbed 1.1 percent,
while brokerage upgrades of technology bellwethers lifted the
Nasdaq <> to a ninth straight daily gain -- the longest
winning streak since 1998.
Japan's Nikkei average <> rose 1.4 percent, getting a
lift from the renewed optimism on the economic outlook as the
market reopened after an extended weekend.
An expected dissolution of the Japanese parliament later in
the day had little impact, the first step towards a national
election expected on Aug. 30.
Cabinet members signed off on Prime Minister Taro Aso's
plan to dissolve parliament's lower house on Tuesday. Market
analysts said the political developments were unlikely to be a
strong trading factor for the day. []
The dollar steadied after hitting a six-week low against a
basket of major currencies, beaten down as investors have
favoured emerging market stocks and bonds over the safety of
the U.S. currency.
The dollar index, a gauge of its performance against six
major currencies, was little changed at 78.880 <.DXY>.
The euro was also steady at $1.4215 <EUR=> after shooting
higher the previous day when a break above the top of its
six-week range against the dollar triggered buying tied to
options, traders said.
The euro is now poised to make a run at its peaks hit in
May around $1.4335, which form a double-top on the charts and
should prove tough resistance.
Against the yen, the dollar dipped 0.3 percent to 93.90 yen
<JPY=>.
Bonds were under pressure again as stocks kept adding to
gains. The benchmark 10-year Japanese government bond yield
<JP10YTN=JBTC> rose 3.5 basis points to 1.350 percent, up from
a low of 1.270 percent hit earlier in the month.
(Additional reporting by Jungyoun Park in Seoul, Charlotte
Cooper and Elaine Lies in Tokyo; Editing by Tomasz Janowski)
