* U.S. consumer confidence data increases hunger for risk
* Oil hits 6-mth high above $62/barrel ahead of OPEC
* Korea stocks, won slide after North threatens South
(Repeats to more subscribers)
By Rafael Nam
HONG KONG, May 27 (Reuters) - Asian shares rose to a
seven-month peak on Wednesday and oil prices hovered near their
highest since November after a jump in U.S. consumer confidence
reinforced a view that the global economy has bottomed, even if
recovery appears fragile.
Major European stocks were expected to open up as much as
0.5 percent higher following gains in Asian and U.S. markets,
according to financial bookmakers, with traders looking to U.S.
existing home sales data later in the day for further signs on
whether the worst of the downturn is over.
Hopes of recovery offset rising geopolitical tensions as
North Korea threatened to attack the South after Seoul joined a
U.S.-led effort to check vessels suspected of carrying
equipment for weapons of mass destruction.
South Korean stocks <> fell 0.7 percent and the won
<KRW=> came under pressure after the threat from the North,
which is facing international sanctions for conducting a
nuclear test on Monday.
Fears that the United States could lose its top-notch AAA
credit rating, which rattled markets last week, also appeared
to take a back seat to optimism about global recovery.
"We're seeing most risk proxies firmer," said Su-Lin Ong, a
senior economist at RBC Capital Markets in Sydney.
"It's not to suggest that there's an 'onward and upwards'
recovery in the U.S. and the globe, but it is consistent with
the idea that the worst is behind us."
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> gained close to 2.3 percent by early afternoon
in Asia after earlier hitting its highest intraday level since
last October, when markets were tumbling in the wake of the
collapse of Lehman Brothers.
Japan's Nikkei average <> rose 1.4 percent, breaking
above its 200-day moving average, with shares of exporters
surging on the U.S. consumer confidence report.
But gains were capped by concern that bankruptcy is drawing
near for ailing General Motors <GM.N> after a deadline passed
for its bondholders to exchange some of the debt into stakes in
the company. []
Elsewhere in Asia, shares in Hong Kong <> jumped 4.7
percent and Taiwan <> rose 3.1 percent
Energy, consumer discretionary and financial stocks led
gains on Wednesday, as they have since the beginning of the 49
percent rally in the MSCI Asia Pacific ex-Japan index since
early March.
But these sectors are also getting more expensive;
valuations on a 12-month forward price-to-earnings basis are at
the highest since mid-2008.
U.S. consumer confidence soared in May to its highest level
in eight months, even though house prices fell at a record pace
in the first quarter, data showed on Tuesday. []
The consumer data pushed U.S. stocks by more than 2
percent.
Consumer spending accounts for roughly two-thirds of the
U.S. economy, so is a positive signal for global trade
including for Asian exporters. However, consumer confidence
indexes have low correlations with actual spending.
Japanese also exports rose in April for the second month
running, data showed on Wednesday, providing another sign that
the slump in global trade may have bottomed. []
Still, Germany reported earlier this week a record
contraction in its economy in the first quarter. []
FEELING GOOD?
Concerns about how the U.S. government will ramp up
borrowing to feed a widening budget deficit have also weighed
on markets since last week.
However, the sale of $40 billion in two-year U.S. Treasury
notes on Tuesday saw strong interest, especially from overseas,
suggesting there are willing buyers of U.S. debt.
Still, traders said longer maturities might not be met by
such strong demand. Total issuance for the week is slated to
total $101 billion, matching a record set earlier this year.
Two more offerings this week will be for five-year and
seven-year debt.
The renewed risk appetite was evident in currency markets.
The yen, seen as a safe haven against risk, fell against
major currencies. The dollar rose 0.5 percent to 95.35 yen
<JPY=>.
The euro gained 0.2 percent to 133.02 yen <EURJPY=R> while
sterling, which has risen steadily against the yen since
January, touched its strongest level since early November at
152.28 yen <GBPJPY=R>.
The Australian dollar <AUD=D4> hit an eight-month high
against the U.S. currency as higher-yielding currencies, which
usually benefit when risk appetite increases, firmed.
Australia's currency jumped more than 8 percent this month,
supported by both a broad retreat in the U.S. dollar and a
rebound in commodity prices.
Crude prices <CLc1> hovered near a six-month above $62 a
barrel, supported by the U.S. consumer confidence data and
comments from Saudi Arabia's oil minister that oil prices would
hit $75 a barrel during the third and fourth quarters of this
year.
Oil has nearly doubled from its lows in December below $33
a barrel. OPEC ministers meet in Vienna on Thursday to consider
production policy but are expected to leave output unchanged.
[]
(Editing by Kim Coghill)
