(Updates with latest prices, details)
By Rafael Nam
HONG KONG, Feb 26 (Reuters) - Most Asia stock markets rose
on Tuesday on hopes that U.S. bond insurers will keep their top
credit ratings, but persistent fears of a U.S. recession and
further bank writedowns limited gains.
European shares <> also opened higher, with investors
looking to results from Standard Chartered <STAN.L> later in
the day for new insights into the state of the financial
sector, which has been battered by losses from the U.S.
subprime mortgage crisis and global credit squeeze.
Asian bonds and the low-yielding yen fell as investors
warily returned to riskier assets such as equities in search of
higher returns.
Gold also extended losses after the U.S. Treasury said it
would support gold sales by the International Monetary Fund,
while oil prices remained within the $99 a barrel range.
The day started on a more optimistic note after Standard &
Poor's on Monday removed its threat to downgrade MBIA Inc
<MBI.N> citing confidence the U.S. bond insurer could raise
more capital, while hopes remains for a rescue plan for Ambac
Financial <ABK.N>.
The fate of insurers has weighed on investors' minds in
recent weeks, given that downgrades could spark sell-offs of
the debt they have guaranteed, potentially leading to further
writedowns in the financial sector and worsening a global
credit squeeze.
But analysts noted the fate of bond insurers still remains
up in the air, while other risks such as the potential of more
credit-related writedowns at global lenders and a slowdown in
the U.S. economy remain in place.
"Certainly, this is very welcome news and one of the very
few positive bits of news we've had on that front for some
time," said Adnan Kucukalic, equity strategist at Credit Suisse
in Sydney.
"But am I sceptical about debt markets? Yes I am. I don't
think we've seen the bottom of it yet. There's still plenty of
subprime losses to come through."
The MSCI measure of Asian stocks excluding Japan rose
<.MIAPJ0000PUS> was up 0.6 percent by 0700 GMT, after gaining
as much as 1.1 percent from earlier in the day.
The index is still down around 10 percent for the year,
marking a sharp reversal after posting double digit growth in
each of the previous five years.
Japan's Nikkei <> hit a six-week early in the session
but ended down 0.7 percent, while South Korean shares <>
ended flat after hitting a five-week high early in the day.
Hong Kong's Hang Seng index <> and China's main index
were up 1 percent, while Australia <> rose 0.8 percent,
helped after retailer Woolworths Ltd <WOW.AX> surged following
unexpectedly strong results.
Indian shares rose 0.5 percent on hopes that the government
will unveil a voter-friendly budget on Friday that includes tax
benefits ahead of 2009 elections.
GOLD EXTENDS SLUMP
The Japanese yen <JPY=> remained under pressure against
major currencies, trading at around 108 against the dollar,
after falling on Monday as investors shifted money into stocks.
Gold extended falls, sliding more than $7 in Asia trade
after losing nearly $6 an ounce overnight, amid fears that
bullion sales by the IMF will take a toll on sentiment. Spot
prices <XAU=> were down at $932.90/$933
Oil <CLc1> dipped to $98.89 a barrel, not far off the $99
level as blasts of cold weather in Europe and parts of the
United States supported energy prices.
Japanese government bond futures fell to a two-month low in
early trade but trimmed their losses amid concern that any
rescue of U.S. bond insurers would provide only short-term
relief to battered equities.
March 10-year futures <2JGBv1> fell as low as 136.89, but
later erased its losses to trade up 0.09 at 137.24.
