GLOBAL MARKETS-Asia stocks climb, JGB yields near 3-1/2-yr low

                                
 * Asia stocks edge up, Seoul hits 6-wk high
                                
 * Dollar and yen dip as risk-taking improves before
year-end
                                
 * Higher-yielding currencies and oil gain
                                
 * JGB 10-yr yield near 3-1/2-yr low, BOJ to boost purchases
                                
 By Eric Burroughs
                                
 HONG KONG, Dec 22 (Reuters) - Asia stock markets edged up
on Monday and the dollar retreated after the U.S. government's
$17.4 billion of rescue loans to ailing automakers last week
gave investors more reason to wade into riskier assets.
                                
 Higher-yielding currencies such as the Australian dollar
gained against the yen after the Bank of Japan last week
followed the U.S. Federal Reserve in cutting interest rates to
nearly zero and vowing to buy troubled assets and help thaw
credit markets.
                                
 Japan's Nikkei average <.N225> climbed 1.4 percent on the
BOJ actions and as Tokyo joined governments worldwide in
pledging $54 billion of spending to help pull the economy out
of recession.
                                
 The need for government action to stem the deep economic
recession was highlighted by data showing Japanese exports
tumbling at a record annual pace in November. [ID:nT304091]
                                
 Hopes for more stimulus to help the real estate market
helped briefly lift South Korea's KOSPI index <.KS11> to a
6-week high, led by gains in builders like Donyang Engineering
& Construction <005900.KS>.
                                
 "We expect the upward trend will continue. The U.S. auto
plan cleared market uncertainties over the U.S. automakers,"
said Daishin Securities strategist Kwak Byung-ryel in Seoul.
                                
 Japanese government bonds extended gains after the BOJ
upped the amount of debt it would purchase each month as part
of its monetary easing measures, even as U.S. Treasuries
retreated on the gains in Asian stocks and U.S. stock futures.
                                
 The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up 0.2 percent, before paring gains. But
for the year, the index is still down 52 percent.
                                
 Portfolio managers have kept shifting funds into Asian
equity markets in a sign of more tolerance for risk. Data from
EPFR Global showed Asia ex-Japan funds received a fifth
straight week of inflows in the week ending last Wednesday.
                                
 DOLLAR DOWN
                                
 The dollar and yen dipped against the euro as currencies
offering higher-yields benefited from the gradual reemergence
of risk-taking as a brutal 2008 draws to a close.
                                
 The dollar bounced back on Friday after sliding to a
13-year low against the yen and a three-month low against the
euro last week, with investors expecting European policymakers
to be more reluctant to cut rates from 2.5 percent.
                                
 Market players also covered some of their hefty bets
against the euro going into the end of the year, helping drive
the single European currency up nearly 8 percent against the
dollar in just three trading days last week.
                                
 Analysts said the dollar's woes were starting to reflect
the bleaker outlook for the world's biggest economy.
                                
 "The picture that the currency market is painting for the
U.S. economy next year is not as hopeful as the one in the
stabilising stock markets," said Kengo Suzuki, a currency
strategist at Shinko Securities.
                                
 The Australian dollar dipped slightly against the U.S.
dollar to $0.6805 <AUD=D4>, but rose 0.7 percent to 61.25 yen
<AUDJPY=R>.
                                
 The Aussie was also underpinned by rising commodity prices.
                                
 U.S. crude oil for February delivery <CLG9> was up 81 cents
at $43.17 a barrel <CLc1>, well above the slide in the January
contract to below $33 last week.
                                
 Safe-haven government bonds were mixed.
                                
 March JGB futures <2JGBv1> climbed 0.25 point to 139.93 and
hit a three-month high of 140.14, while the benchmark 10-year
yield <JP10YTN=JBTC> dipped 1 basis point to 1.215 percent and
was near a 3-1/2-year low hit on Friday.
                                
 But Treasuries slipped. Ten-year notes <US10YT=RR> were
down 3/32 in price to yield 2.137 percent, up 1 basis point
from late U.S. trade Friday and off the five-decade low of
2.040 percent touched last week.
                                
 Long-term Treasury yields plunged after the Fed reiterated
that it was considering buying such bonds as part of its
efforts to revive bank lending and credit markets to help the
economy.
 (Additional reporting by Kim Yeon-hee in SEOUL and Satomi
Noguchi in TOKYO; Editing by Dhara Ranasinghe)