* Asian stocks climb to highest in 7 months; Nikkei gains
* Dollar and yen struggle as investor confidence picks up
* U.S. crude oil futures rise to $60 a barrel
* Indian shares build on Monday's election gains
(Repeats to more subscribers)
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, while oil hovered at six-month
peaks as supply concerns helped buoy prices.
The dollar struggled, as did the yen, after both tumbled
the previous day when a rally in U.S. stocks showed risk
appetite was reviving and investors felt confident enough to
buy commodity-related currencies and other riskier majors.
European stocks were set to gain, with futures for the
Eurostoxx 50 <STXEc1> rising 1 percent and for Germany's DAX
<FDXc1> up 0.9 percent.
"Hopes are growing that the macro economy is gradually
recovering. It's clear that the economic free-fall phase is now
over," said Junichi Misawa, a senior fund manager at STB Asset
Management in Tokyo.
Japan's benchmark Nikkei average <> closed up 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.
Data on Japan's gross domestic product due on Wednesday is
forecast to show the world's second-largest economy contracted
4.2 percent in January to March, which would be its deepest
quarterly contraction since World War Two. []
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 <> 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 <>
advanced 3.11 percent. S&P futures <SPc1> were steady on
Tuesday.
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".
[]
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 3 percent to its highest since October.
Miners including BHP Billiton <BHP.AX> helped lift
Australian shares <> 2 percent, while energy stocks in
Hong Kong soared after a jump of nearly 5 percent in crude
prices on Monday, helping the Hang Seng index <> climb 3
percent.
In India, the main stock index <> rose 2 percent,
building on gains of 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.
[]
U.S. crude futures <CLc1> topped $60 a barrel after
settling at a six-month high on Monday on supply concerns
following unrest in Nigeria, where militants threaten to
disrupt crude exports, and following a fire in a key U.S.
refinery. []
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. []
"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 held on to gains made against both the dollar and
yen the previous day as sterling <GBP=D4> hit its highest level
since mid-Decmber.
Debt prices retreated with the yield on the benchmark
10-year Japanese government bond <JP10YTN=JBTC> edging up 2
basis points to 1.420 percent and JGB futures <2JGBv1> slipping
0.14 point to 137.17.
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. []
Benchmark 10-year notes <US10YT=RR> rose about 2 basis
points to yield 3.250 percent, after climbing 10 basis points
on Monday.
Gold <XAU=> rose on light cash buying to top $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)
