GLOBAL MARKETS-Asian shares hit 7-month highs, oil at $59

                                
 * Asian stocks climb to highest in 7 months; Nikkei gains
                                
 * Dollar and yen struggle as investor confidence picks up
                                
 * Oil holds at 6-month highs as supply concerns persist
                                
 * Indian shares ease after Monday's leap on election result
                                
 By Charlotte Cooper
                                
 TOKYO, May 19 (Reuters) - Asian shares climbed to their
highest level in seven months on Tuesday on fresh hopes the
global recession is easing, and oil hovered at six-month peaks
as supply concerns helped buoy up prices.
                                
 The dollar struggled, as did the yen, after both tumbled
the previous day when a 3 percent gain in U.S. shares boosted
investor confidence that the global downturn may be slowing,
encouraging buying in commodity currencies and other majors.
                                
 In Tokyo, the benchmark Nikkei average <.N225> rose 2.8
percent, with exporters such as Canon Inc <7751.T> helped by
the yen's retreat after a top finance ministry official gave a
warning about recent yen strength and its impact on the
economy.
                                
 But analysts were cautious ahead of data on Japan's gross
domestic product on Wednesday, which is forecast to show the
world's second-largest economy contracted 4.2 percent in
January to March, likely its worst quarterly contraction since
World War Two. [ID:nT42935]
                                
 "Nobody really wants to take on new risk ahead of this,"
said Tomomi Yamashita, a fund manager at Shinkin Asset
Management.
                                
 "At the same time, there's a bit of risk from currency
movements, and while the dollar recovered yesterday against the
yen on a Japanese official's comments amounting to verbal
intervention, these gains are shaky."
                                
 U.S. stocks rallied on Monday as better-than-expected
results from the No. 2 U.S. home improvement retailer, Lowe's
Cos Inc <LOW.N>, helped spark broad-based buying on hopes
consumer spending is stabilising. A revival in badly battered
U.S. consumer confidence is key to a broader global recovery.
                                
 The Dow Jones industrial average <.DJI> gained 2.85 percent
to 8,504.08, the Standard & Poor's 500 Index <.SPX> rose 3.04
percent to 909.71 and the Nasdaq Composite Index <.IXIC>
advanced 3.11 percent. S&P futures <SPc1> were steady in Asian
trade.
                                
 POSITIVE BUT CAUTIOUS
                                
 Officials at the World Bank, European Central Bank and U.S.
Treasury also offered cautiously upbeat comments, with Treasury
Secretary Timothy Geithner saying the U.S. economy had "clearly
stabilised" although he warned things would remain "bumpy".
[ID:nSP475971]
                                
 The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> hit its highest since October, although India's
main stock index <.BSESN> slipped after soaring more than 17
percent on Monday as investors cheered a decisive election
victory by the ruling coalition, which could open the way for
more economic reforms.
                                
 Miners including BHP Billiton <BHP.AX> helped lift
Australian shares <.AXJO> by 2 percent, while energy stocks in
Hong Kong <.HSI> soared after a jump of nearly 5 percent in
crude prices on Monday.
                                
 Oil prices <CLc1> steadied around $59 a barrel on Tuesday
after climbing on concerns about supply following unrest in
Nigeria, where militants threaten to disrupt crude exports, and
following a fire in a key U.S. refinery. [O/R]
                                
 The dollar, which hit a two-month low of 94.55 yen on
Monday before rebounding more than 1 percent, rose a further
0.1 percent to 96.40 yen <JPY=> but lost ground to the
Australian dollar <AUD=D4>, edging back towards a recent
seven-month low.
                                
 The Australian dollar also stood within sight of a recent
seven-month peak on the yen, underpinned after Reserve Bank of
Australia Governor Glenn Stevens said domestic interest rates
were "pretty low" but then also cautioned against expectations
for a quick recovery. [ID:nSYD5580]
                                
 "The yen remains vulnerable as firmness in stocks bolster
risk appetite, with people encouraged to buy higher-yielding
currencies such as the Australian dollar against the yen,"
Tsutomu Soma, a senior manager at Okasan Securities in Tokyo.
                                
 The euro and sterling also held on to gains made against
both the dollar and yen the previous day, with sterling edging
towards its highest since early January against the dollar.
                                
 Debt prices retreated with the yield on the benchmark
10-year Japanese government bond <JP10YTN=JBTC> edging up 1
basis point to 1.410 percent and the front-month JGB futures
contract <2JGBv1> slipping 0.16 point to 137.15 <2JGBv1>.
                                
 U.S. Treasuries were little changed after losses the
previous day, with bond investors cautious ahead of housing
starts data which could enhance optimism about economic
recovery. [US/]
                                
 Benchmark 10-year notes <US10YT=RR> rose 1 basis point to
yield 3.236 percent, after climbing 10 basis points on Monday.
                                
 Gold rose on light cash buying to around $920 per ounce,
but investors were cautious that improved U.S. housing data
could further dull the metal's appeal as a safe haven from
volatility.
 (Editing by Kim Coghill)