* Asia stocks up 1.2 pct, financials lead on bank hopes
* Oil drops $2 on doubts about OPEC supply cut enforcement
* G20 pledges crisis action, little impact
(Repeats to more subscribers)
By Eric Burroughs
HONG KONG, March 16 (Reuters) - Asian stocks struck a
one-month high on Monday as reassurances over the health of the
U.S. banking sector sparked a broad recovery in investor
appetite for risk, while safe-haven government bonds also
gained on hopes for more central bank buying.
Oil prices tumbled $1.87 a barrel to $44.38 <CLc1> as
market players questioned whether OPEC's weekend decision to
enforce better compliance on previous supply cuts would be
enough to offset the drop in global demand.
Last week U.S. banking giants Citigroup <C.N., Bank of
America <BAC.N> and JPMorgan Chase <JPM.N> all said they were
profitable in the first two months of the year, giving a big
lift to battered financial shares around the world.
Reports that the Bank of Japan was considering buying
subordinated debt issued by banks boosted Japan's Nikkei
average <> 2.4 percent, taking it further away from a
26-year closing low touched last week. The Tokyo Stock Exchange
bank index <.IBNKS.T> jumped 5.8 percent.
But Japanese government bonds also pushed higher, bucking
the rebound in riskier assets, on reports the BOJ was also set
to boost its monthly debt purchases.
Outright purchases of government bonds is one of the
extreme policy options some central banks, such as the Bank of
England, have adopted to buttress hard-hit economies after
having already chopped interest rates to near zero.
Over the weekend, finance ministers and central bankers
from Group of 20 countries pledged to use their full fiscal and
monetary firepower to combat the economic crisis, but decisions
taken focused more on funds for the IMF and regulating hedge
funds. []
Federal Reserve Chairman Ben Bernanke said on Sunday that
he sees a U.S. recovery beginning in 2010, but a risk remained
that there was not enough political will to do everything
necessary to fix the fractured financial system.
[]
The Australian <AUDJPY=R> and New Zealand dollars
<NZDJPY=R> led gains versus the low-yielding yen, pushing back
near a two-month peak.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 1.2 percent, driven by the jump in
financial shares. On Friday the U.S. S&P 500 <.SPX> rose 0.8
percent and racked up its biggest weekly gain since November.
"Gains are likely to continue as long as U.S. stocks
continue their recovery," said Yoo Soo-min, a market analyst at
Hyundai Securities.
The dollar was mixed, edging up against the yen and getting
a lift from the rise in higher-yielding currencies. The dollar
edged up 0.2 percent to 98.25 yen <JPY=>, and the Aussie rose
0.3 percent to 64.45 yen <AUDJPY=R>.
The yen fell in part on selling by Japanese importers and
other corporates. The yen has been whipped around by investor
and corporate flows before Japan's business year wraps up at
the end of the month.
With the focus on the U.S. financial system, the daily
moves in the S&P 500 are having a big impact across markets.
For example, the rolling 90-day correlation between the S&P and
Aussie is a positive 70-80 percent -- showing the two tend to
move closely together.
The South Korean won <KRW=>, the most battered of Asian
currencies on worries about the country's ability to roll over
its foreign debt, jumped about 2 percent and has rebounded
nearly 10 percent from an 11-year low hit earlier in the month.
In government debt markets, June JGB futures <2JGBv1> edged
up 0.20 point to 138.87, up from a one-month low hit last week.
The rise on bonds pushed the benchmark 10-year yield
<JP10YTN=JBTC> down 1.5 basis points to 1.300 percent.
