* 10-year US yield at 3.22 pct vs overnight high of 3.33 pct
* Australia dollar jumps on surprising strength in jobs
* Treasury selloff may be reason to cut bonds, increase
stocks
By Kevin Plumberg
HONG KONG, Dec 9 (Reuters) - U.S. Treasury prices edged up
on Thursday as bargain hunters entered the fray after a
violent two-day surge in yields, pulling the dollar lower,
while Asian stocks rose on hopes added fiscal stimulus will
help the U.S. economy in the near term.
In stark contrast to the jobless U.S. recovery that the
White House is trying to shore up with tax cuts, Australia's
jobs growth in November was the biggest since January, blowing
past forecasts and lifting the Australian dollar and domestic
shares. []
The financial world is becoming split between investors
who are deeply concerned a proposal from U.S. President Barack
Obama to extend tax cuts will worsen a budget shortfall, and
investors who are relieved U.S. authorities are trying to use
fiscal and monetary medicine for the economy.
Both higher U.S. yields and higher growth are being seen
as supportive for the dollar, for now.
"The stimulus measures agreed by the U.S. administration
will likely lead to many analysts penciling in higher growth
forecasts over 2011 whilst reducing the prospects of QE3 from
taking place, all of which is dollar positive," Mitul Kotecha,
global head of foreign exchange strategy with Credit Agricole
CIB in Hong Kong, said in a note.
The lead 10-year U.S. Treasury future was up around 9/32
in early Asian trade <TYc1>, after hitting the lowest since
June 25 overnight. Even after the Federal Reserve's highly
anticipated plan to buy more bonds to push down interest rates
was hatched in early November, the bond market has
relentlessly sold mid to longer-maturity bonds.
Since November, the difference between 10-year yields and
2-year yields has widened by nearly 40 basis points.
In the cash market, the benchmark 10-year yield was at
3.22 percent after climbing to 3.33 percent on
Wednesday, the highest since June.
The poor performance of sovereign bond markets in the
fourth quarter made much worse this week has become a question
of allocation for many investors. Bob Doll, chief investment
strategist at BlackRock, told the Reuters 2011 Investment
Outlook Summit the deal in Washington to extend tax cuts will
probably accelerate the move of cash into equities and out of
fixed income. []
The U.S. dollar has benefited from the rapid pace of
rising Treasury yields relative to other sovereign bonds. The
move lower in U.S. yields on Thursday pushed down the dollar
index, a gauge of performance against six other major
currencies, 0.33 percent .
The Australian dollar rose 0.7 percent to $0.9863
after employment increased by a net 54,600 jobs last month,
surpassing expectations of a 19,000 gain.
Interbank rate futures tumbled while Australian
government bond futures <0#YTTc1> fell, unlike other
sovereigns on the day.
In stock markets, Japan's Nikkei share average hit a
seven-month high though short-term measures showed the market
was due for a pause, having risen 12 percent since November
compared with the 6 percent advance in the MSCI all-country
world index .
"Thanks to both the yen's weakness and Nikkei futures
ending higher in Chicago, the Nikkei may see more buying, but
the market has been overbought," said Yumi Nishimura, a senior
market analyst at Daiwa Securities Capital Markets.
Foreign investors gobbled up Japanese stocks last week,
with net buying reaching the highest since early April,
Finance Ministry data showed. Foreigners have been net buyers
for 5 straight weeks, bringing the total net buying to 730.6
billion yen over the period. Out of the last 10 weeks
foreigners were net buyers in nine weeks.
The MSCI index of Asia Pacific stocks outside Japan rose
1.1 percent , with gains spread evenly across
all sectors.
(Additional reporting by Chikafumi Hodo and Ayai Tomisawa in
TOKYO, editing by Kazunori Takada)
