* Asian stocks gain 0.7 pct but buyers cautious
* Oil prices up nearly $1 a barrel after recent 13 pct
slump
* U.S. Treasuries retain safe-haven lustre despite low
yields
* Central banks expected to cut rates aggressively
(Repeats to more subscribers, updates with latest Asian
prices, European outlook)
By Rafael Nam
HONG KONG, Dec 3 (Reuters) - Asian stocks and oil rebounded
on Wednesday from recent sell-offs, but low-risk assets such as
U.S. Treasuries also retained their lustre despite offering the
lowest yields in decades amid worries about the ailing global
economy.
The euro edged lower ahead of meetings on Thursday by the
European Central Bank and the Bank of England, both of which
could result in hefty interest rate cuts.
Policymakers worldwide are cutting rates to fight a global
recession and pondering further measures to stabilise financial
markets, including help for struggling U.S. auto makers, but it
will take time to restore battered consumer and investor
confidence.
"It is difficult to see the rally in equities being
sustained and it will not take much in the way of more bad
economic news to bring a dose of reality back," Calyon analysts
said in a note to clients on Wednesday.
European shares were set for a mixed opening on Wednesday,
with Britain's FTSE 100 <> seen unchanged to slightly
higher, while Germany's DAX <> and France's CAC <>
were seen falling.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.7 percent as of 0630 GMT, rebounding
from a 4.1 percent slump in the prior session.
The gains tracked a rally in Wall Street on Tuesday that
came following a pledge by General Electric <GE.N> to leave its
dividend intact and the Federal Reserve's decision to extend
the terms of three emergency liquidity facilities by three
months.
Still, the outlook for the global economy continues to
weaken, with Australia saying on Wednesday that growth in the
last quarter was at its slowest pace in eight years as
consumers and businesses reduce spending. []
Corporate profits worldwide are also under threat as
consumers cut back spending amid gloomy economic news and
mounting layoffs. U.S. auto makers on Tuesday posted a nearly
37 percent plunge in monthly sales that brought levels to their
lowest since 1982. []
Asian markets gained, nonethless, led by shares seen as
oversold or more protected from a global slowdown, though that
was balanced by weakness in auto makers such as Honda Motor
<7267.T> and exporters such as Samsung Electronics <005930.KS>.
Tokyo's Nikkei average <> advanced 1.8 percent,
regaining some ground after a drop of over 6 percent on
Tuesday.
Shares in Hong Kong <> and Shanghai <> gained 2-3
percent, while Singapore <.FTSTI> rose 1.4 percent and
Australia <> posted a modest advance.
But shares in Taiwan <> and India <> fell, while
South Korea <> ended nearly unchanged.
Among the advancers in the region, shares in Australia's
Qantas Airways <QAN.AX> rose 4.4 percent after saying it was in
talks with British Airways <BAY.L> to form a dual-listed
airline that could be worth almost $6 billion at current market
prices. []
EYE ON CENTRAL BANKS
Governments from London to Washington to Beijing have
announced a flurry of stimulus measures in recent months to
shore up their slowing economies and restore public confidence,
but investors remain concerned about how long it will take for
the moves to work.
Analysts now believe a global recession could last longer
than first anticipated, putting a near-term recovery in stock
markets in doubt.
"Consensus has been built in the market that the U.S.
economy won't recover easily -- until late 2009 or early 2010
at the earliest -- despite a raft of measures taken by the
government," said Takahiko Murai, general manager of equities
at Nozomi Securities in Japan.
The European Central Bank meets on Thursday, and most
economist still expect an interest rate cut of only 50 basis
points, despite a stream of poor economic data and a sharp drop
in inflation that had raised hopes for a larger easing.
[]
On the other hand, the Bank of England is expected to cut
rates by an aggressive 100 basis points, while financial
markets have priced in a 150 bps cut from New Zealand's central
bank, both scheduled for Thursday. [] and
[]
The euro edged down 0.1 percent to $1.2703 <EUR=>. Against
the yen, the European single currency slipped 0.1 percent to
118.48 yen <EURJPY=R>.
Sterling was down 0.1 percent at $1.4893 <GBP=D4>.
The dollar was at 93.22 yen <JPY=>, steady from late
Tuesday U.S. trading, after falling as low as 92.86 yen in
early Asian trade. The U.S. currency hit a five-week low of
92.63 yen on trading platform EBS the previous day.
Oil prices <CLc1> recovered some of their losses of more
than 13 percent since last week, gaining 78 cents to $47.74 a
barrel.
However, the outlook remains weak ahead of data later in
the day expected to show a third consecutive week of rises in
U.S. crude inventories as economic growth and fuel demand slow.
[]
Gold <XAU=> fell $2.10 to $779.40 an ounce as it benefitted
from the firmer U.S. dollar and as speculators in Japan shifted
some of their money back to stocks.
But in a sign that caution remains, U.S. Treasuries edged
down as investors took profits from recent gains. Investors
drawn by Treasuries' safe-haven allure have been willing to
accept the lowest yields in decades.
The benchmark 10-year notes edged down 4/32 in price to
yield 2.717 percent <US10YT=RR>, up nearly 2 basis points from
late New York trade on Tuesday. On Monday, the yield fell to
about 2.65 percent, the lowest in 50 years.
The two-year note dipped 3/32 in price to yield 0.945
percent <US2YT=RR>, up about 5 basis points after recently
trading at record lows.
(For more news on the global financial crisis, click on
[])
(Additional reporting by Aiko Hayashi in TOKYO; Editing by Kim
Coghill)
