* Asia stocks hit 7-mth high, European shares poised to
gain
* About 10 of 19 stress tested U.S. banks need
capital-source
* Fed's Lacker says U.S. recession to end in 2009
* Australia central bank holds rate steady, voices optimism
By Dan Burns
HONG KONG, May 5 (Reuters) - Asian stocks rose to fresh
seven-month highs on Tuesday as optimistic comments from
central bankers bolstered confidence that the worst of the
global economic downturn may have passed, offsetting anxiety
about U.S. banks and their capital needs.
European shares looked poised to follow the Asian advance
and play catch up with Monday's big U.S. rally, which took the
benchmark Standard & Poor's 500 index <.SPX> into positive
territory for the year [].
The S&P is now up 34 percent from a 12-year low hit just
two months ago, but even that performance has lagged the
monster rally underway in the Pacific.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> was 0.5 percent on the day and is now up more
than 45 percent from its March low.
Still, the day's equity gains in Asia were muted by news
the U.S. Treasury will instruct about 10 banks to raise more
capital to shore up their balance sheets in case the economic
deteriorates further. The government will release more details
of bank stress tests on Thursday. [].
Hong Kong's Hang Seng index <> rose 0.13 percent, led
by a 0.8 percent gain in global lender HSBC <0005.HK>, while
Australia <> edged up 0.2 percent.
Taiwan's main TAIEX index was up 0.8 percent <>,
benefitting from closer investment ties between China and the
island economy. Japanese and South Korean markets were closed
for holidays.
LIGHT AT THE END OF THE TUNNEL
The Australian dollar rose to its highest since early
October against the U.S. dollar after the Reserve Bank of
Australia kept its key cash rate steady [], while
the greenback firmed against the euro and sterling as traders
took profits on those currencies amid caution ahead of the U.S.
bank stress test results.
In its statement, the Australian central bank noted
improving conditions in China, a key driver of regional growth.
"The Reserve Bank's definitely viewing the economic
prospects moving ahead with more a glass half-full than glass
half-empty, they mention that the Chinese economy is picking up
speed and that commodity prices have firmed," said Josh
Wiliamson, economist with Citi in Australia.
The RBA's statement dovetailed with similarly optimistic
comments from U.S. and Swiss policy makers.
The president of the Federal Reserve Bank of Richmond,
Jeffrey Lacker, said the U.S. recession is fading and growth
will resume this year. [] And the vice chairman of
the Swiss National Bank, Philipp Hildebrand, told a German
newspaper the downturn may be nearing a turning point.
[].
U.S. stock futures were down 0.3 percent <SPc1> after a
source familiar with a series of stress tests on 19 U.S. banks
told Reuters that about 10 lack an adequate cushion of capital
needed to guard against further economic decline.
[]
Investors will likely remain skittish until the stress test
results are announced, but improving U.S. and emerging market
economic data, particularly in Asia, have encouraged investors
to take risks.
Ivan Leung, chief investment strategist with JPMorgan
Private Bank Asia in Hong Kong, said he did not see the stress
tests as a major obstacle to this trend.
China's speedy recovery compared with other major economies
remains the top draw for foreign investors, who have poured
cash into the region since March.
The Intercontinental Exchange's U.S. dollar index <.DXY>,
which measures its value against a basket of six other major
currencies, was up 0.27 percent, after touching the lowest
since March 26 on Monday. The gain was largely against the
euro, which had hit a one-month high against the dollar on
Monday.
Against the yen, which has often gained in times of market
uncertainty, the dollar fell 0.1 percent to 98.80 yen <JPY=>.
The Australian dollar <AUD=> was up fractionally at
$0.7406. The Australian dollar has risen in tandem with global
equity markets, up some 14 percent in the last two months.
Bonds were steady, though fixed-income markets were quiet
with financial markets in Japan and Korea closed.
U.S. crude for June delivery was down 0.8 percent to $54.08
<CLc1> a barrel after settling at the highest since November 24
on Monday.
Oil has been gaining steadily since mid-February on
expectations economic recovery is in sight for the world's
biggest energy consumers.
