* Asian stocks edge up, poised for near 70 pct annual gain
* Dollar hovers near 16-week highs against yen
* Oil up for a 7th day, trading just shy of $80
(Repeating to more subscribers)
By Susan Fenton
HONG KONG, Dec 31 (Reuters) - Asia stocks rose on Thursday,
poised for a near 70 percent gain on the year, while the dollar
hovered near 16-week highs as a jump in U.S. consumer
confidence reinforced views that the world's largest economy
was gradually recovering.
Equities are expected to build on this year's gains in
2010, but market watchers are uncertain whether the dollar's
rebound this month is temporary or the start of a longer-term
upturn.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> rose 0.6 percent in thin trade, taking its
gains for the year to 67 percent, but markets in Japan and
South Korea were already closed ahead of the New Year's
holiday.
Equity investors were encouraged by a Chicago business
barometer, which hit a four-year high, and data showing U.S.
consumer confidence rose to a three-month high in December. A
decisive rebound in U.S. consumer demand will be vital for a
sustained global recovery next year. []
The encouraging reports spurred the Dow Jones industrial
index <> to a slight gain on Wednesday, setting the U.S.
blue chip index up for its first annual gain in two years. []
Shares in Asia have bounced sharply from March lows,
reflecting renewed risk appetite from investors as the global
economy picked up from its worst downturn in decades.
Asian stock markets are set for continued but more modest
gains in 2010, said Sebastien Barbe, Asia economist at Calyon
in Hong Kong.
"The rally in Asian equities will continue because there is
still a lot of cash in the global economy. Asia is perceived as
the place where economic growth will be strong in the next five
year and it does not have the problem of government or
household debt that the West has," said Barbe.
However, uncertainty over when the U.S. will start to raise
interest rates will weigh on global equity markets in 2010,
Barbe said. Calyon does not expect the Federal Reserve to
increase rates until 2011, arguing that while U.S. economic
data is improving it is still weak.
"If we are wrong, and markets price in an earlier than
expected U.S. rate increase, that will have an impact on equity
markets, including in Asia," said Barbe.
The dollar was trading at 92.39 yen <JPY=>, after hitting a
16-week high against the Japanese currency at around 92.77 in
New York trade.
The dollar has rallied 7 percent against the Japanese
currency this month but looks set to end a volatile year with a
modest loss for 2009 against a basket of major currencies
<.DXY>.
OIL WITHIN SIGHT OF $80
Resource stocks gained as oil prices rose for a seventh
straight day, trading just shy of $80 a barrel following a
drawdown in U.S. oil investories and unseasonally cold weather
across the northeastern United States.
Oil is now poised to mark its strongest year in a decade,
having rallied nearly 80 percent since the start of 2009.
Signs that the U.S. recovery may be on more solid footing
have dented gold's appeal as a hedge against further weakening
of the dollar, although spot gold <XAU=> steadied on Thursday,
edging up to $1,096.70 an ounce from $1,092.55 at the New York
close.
The near-term outlook for the metal is uncertain as traders
are unsure if the dollar will build on its recent gains.
As the year drew to a close, Australia's stock market
posted its biggest annual gain in 16 years with a sterling 31
percent rise from a year ago, reflecting rising global demand
for commodities ranging from iron ore to oil.
"There's definitely been a sense -- and there has been for
the last several months -- that in Australia we weathered this
so much better than anyone else," said Cameron Peacock, an
analyst at IG Markets in Melbourne.
The Australian dollar <AUD=> has been the best performing
major currency and was on track for a resounding 27 percent
gain against the U.S. dollar this year.
The Aussie edged up to $0.8967, from $0.8904 late on
Wednesday.
Against a trade-weighted basket of currencies, it is up 25
percent this year, helped by its relatively high yield which
has attracted investors as risk appetite improved.
With Australia expected to raise interest rates again soon
and demand for commodities seen continuing to rise next year,
traders say the Aussie is poised for further gains early in
2010.
(Additional reporting by Morag MacKinnon in SYDNEY; Editing by
Kim Coghill)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
