* Asia stocks edge up on hopes for big stimulus
* Yen gains, risk aversion still widespread before year-end
* Oil little changed, safe-have govt bonds tad weaker
By Eric Burroughs
HONG KONG, Dec 9 (Reuters) - Asian stocks edged up on
Tuesday to a one-month high, but gains were kept in check as
hopes for big government spending to revive growth were offset
by investors shying away from risk in wrapping up a brutal
2008.
U.S. crude oil prices <CLc1> were little changed near
$43.80 a barrel after rebounding from a four-year low last
week, while safe-haven government bonds dipped slightly.
"Reports about additional government support and economic
stimulus plans do help sentiment, but the economy is still in a
deep slowdown, and we will probably see more grim economic
data," said Kwak Joong-bo, a market analyst at Hana Daetoo
Securities in Seoul.
Global stocks bolted higher on Monday as U.S. authorities
thrashed out a rescue plan for struggling automakers and U.S.
President-elect Barack Obama said he would undertake the
biggest infrastructure spending since the 1950s.
The White House reviewed a Democratic plan to bail out the
automakers with $15 billion of loans. []
Investors are still debating whether the sharp sell-off
this year has run its course or there is worse to come as the
global economy slides into a deep recession that has already
claimed the three major regions: the United States, Japan and
the euro zone.
Data on Tuesday showed Japan's economy contracted at an
even faster pace than originally estimated during the third
quarter, showing the recession deepening and raising worries
the world's second largest economy faces its longest period of
contraction ever. []
Economists at Deutsche Bank forecast that global growth
next year will be barely above zero.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.3 percent and touched its highest in
about a month, a day after jumping 7 percent.
Hopes that Chinese economic leaders meeting this week in
Beijing would unveil more measures to prop up growth helped
fuel the rebound.
HUNT FOR CAPITAL
The financial crisis is still forcing banks to hunt for
more capital, with banking shares in Australia taking a hit
after Westpac Banking Corp <WBC.AX> announced a $1.7 billion
share sale. []
"It's a reminder that there's still going to be an ongoing
call for additional capital, maybe not this side of the new
year, but possibly on the other side of the new year," said
Jamie Spiteri, a dealer at Shaw Stockbroking.
Japan's Nikkei average <> rose 0.5 percent, lagging
the 3.8 percent jump in the S&P 500 <.SPX> on Monday.
But the yen's gains showed that investors are still taking
advantage of any rebound in higher-yielding currencies to sell,
suggesting more market players are looking to close out
positions and raise cash holdings before year-end.
The yen tends to move in close synch with stocks due to its
role in the carry trade, which tends to attract more funds when
stocks are rising and market volatility falls.
The Australian dollar, a bellwether of investor willingness
to hold risky positions, dropped more than 1 percent against
the yen to near 61.00 yen <AUDJPY=R> after having gained 3
percent the previous day on the rebound in equities.
Over the past year, the daily correlation between the
Nikkei and Aussie/yen is a positive 0.94 -- showing the two
move almost in lockstep.
The dollar was little changed near 92.80 yen <JPY=>,
hovering just 2 yen above a 13-year low struck in October.
But the dollar index, a gauge of its performance against
six major currencies, was up 0.4 percent at 86.006 <.DXY> after
sliding the previous day.
Along with the yen, the dollar has also traded in close
tandem with stocks, gaining whenever there is a flare up of
risk aversion and tumble in shares as investors shift out of
riskier currencies.
The dollar has also soared as U.S. investors have
repatriated funds from their hefty holdings of foreign assets,
while hedge funds and others have scrambled to acquire the
dollar funding they need with money markets still largely
frozen.
With financial markets settling down, investors have taken
profits on the big rally in safe-haven government bonds.
Japanese government bonds also dipped as dealers made room
on their books for an auction of five-year paper. The yield on
the benchmark 10-year note <JP10YTN=JBTC> edged up half a basis
point to 1.395 percent.
U.S. Treasuries were also a tad weaker. The 10-year note
<US10YT=RR> slipping 2/32 in price to yield 2.751 percent,
little changed from late U.S. trade but off Friday's low of
2.510 percent -- the lowest since the 1950s.
(Additional reporting by Sonali Paul in Melbourne and Park
Jung-young in Seoul; Editing by Dhara Ranasinghe)
