* Oil rises to fresh 7-month highs as commodities climb
* Australia dollar climbs back above $0.80
* US Treasury yields tick lower after 10-yr jumps to 4 pct
* Asia ex-Japan resource stocks test 7-month highs
By Kevin Plumberg
HONG KONG, June 11 (Reuters) - Commodity-related stocks in
Asia and the Australian dollar rose for a third straight day on
Thursday as oil prices extended gains, keeping a rising trend
in raw materials prices intact.
U.S. Treasuries edged higher, after the benchmark 10-year
yield <US10YT=RR> advanced to 4 percent overnight, the highest
since Oct 16, on concern about how expensive it will be for the
U.S. government to finance its growing budget deficit.
The U.S. dollar fell against the euro ahead of an $11
billion auction of 30-year bonds later.
The relationship between oil and the dollar continued to be
an inverse one, with tight inventories squeezing crude prices
to the highest since late October.
"Oil prices continue their march to, and then beyond, $75
per barrel. Our forecast of an average $85 a per barrel for
2010 appears well on track, and we believe further upside price
risk exists incoming quarters," Barclays Capital analysts said
in a research note.
London Brent crude oil futures <LCOc1> touched a
seven-month high of $72.25 a barrel, following U.S. data
showing tighter inventories. U.S. light crude for July delivery
was up 0.8 percent to $71.90 <CLc1>.
Japan's Nikkei share average <> briefly poked above
the psychologically key 10,000 to an eight-month high but was
down 0.2 percent by late morning on worries that rising
interest rates in U.S. bond markets could thwart an economic
recovery.
Still, shares of Nippon Steel Corp <5401.T> and other steel
companies jumped and held on to gains on a Morgan Stanley
upgrade of its sector ratings.
The benchmark S&P/ASX 200 index <> in resource-rich
Australia edged up 0.2 percent, due mainly to a 14 percent
surge in shares of Fortescue Metals <FMG.AX> on market rumours
of Chinese takeover interest.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> was largely flat on the day, but the materials
sector index <.MIAPJMT00PUS> was up 1.3 percent.
The sub-index has risen 79 percent in the last three
months, and the 90-day correlation with the Australian dollar
has tightened to 0.98.
The Australian dollar was up around 1 percent at US$0.8092
<AUD=>, boosted after a report showed national employment fell
much less than expected in May. The data was interpreted by the
market to mean the Reserve Bank of Australia has fewer reasons
to lower interest rates further to support the economy.
[]
The New Zealand dollar <NZD=> rallied more than 1.2 percent
to $0.6330/40 after the central bank kept its interest rate
steady at a record low 2.5 percent and pledged to keep it there
through next year, a move seen ending its aggressive easing
cycle to combat recession as the economy shows tentative signs
of bottoming out. []
The euro rose about 0.4 percent to $1.4020 <EUR=>, but
trading remained choppy, with the market's focus torn between
higher U.S. yields, pronouncements from reserve managers on
their Treasury holdings and the trajectory of interest rates in
the euro zone.
Some analysts were positive about the dollar's outlook,
because of sustained interest by foreign official investors as
well as private investors looking for higher yields.
"The dollar gained following the steepening of the U.S.
yield curve, which is certainly good news as it suggests the
dollar can do well in an environment of rising yields,
particularly should sovereign concerns abate," said Brian Kim,
currency strategist with UBS, in a note to clients.
The benchmark 10-year U.S. Treasury yield slipped to 3.94
percent <US10YT=RR> after rising as high as 4 percent on
Wednesday. This week Treasuries have been under pressure
because of $65 billion in new supply coming to the market.
Higher Treasury yields have a domino effect on the economy,
since key rates for loans like mortgages are benchmarked to
them. So, in the last three weeks, the 30-year U.S. mortgage
rate has risen 88 basis points, according to the Mortgage
Bankers Association, at a precarious time when the housing
market is slowly stabilising.
Japanese government bonds also sold off, pushing up the
10-year yield to the highest since late October, at 1.555
percent <JP10YTN=JBTC>.
(Additional reporting by Maryelle Demongeot in SINGAPORE)
(Editing by Kim Coghill)
