GLOBAL MARKETS-Asia stocks set for biggest jump in a decade

                                
 * Asia stocks set for best month since 1999
                                
 * Asian swap rates up as c.banks seen on pause
                                
 * Dollar slips but up for 4th straight quarter
                                
 By Eric Burroughs
                                
 HONG KONG, March 31 (Reuters) - Asian stocks edged up on
Tuesday and were set to score their biggest monthly rise in a
decade as some investors bet the most painful stretch of
corporate earnings damage may be over and bought Asian
technology shares.
                                
 As the first quarter and Japan's financial year draws to a
close, stocks, oil prices and higher-yielding currencies gained
after a one-day battering on news that the U.S. government was
considering pushing General Motors <GM.N> into bankruptcy.
                                
 Government bonds retreated as equity markets regained their
composure, while the dollar slipped as investors favoured
riskier assets.
                                
 Asian stocks outside Japan were set to finish the first
quarter with a dip of 0.7 percent but were up 15 percent in
March, what would be the largest rise since 1999.
                                
  "There has been a huge change in sentiment. Rather than
anticipating huge sell-offs in the U.S., we've been
anticipating rallies," said Peter Wright, a dealer with Burrell
Stockbroking in Sydney.
                                
 Many stock markets have thrashed in ranges near last year's
lows, with investors cautious about calling a turnaround as the
global economy remains mired in a deep recession.
                                
 The economic fallout from the financial crisis is still
taking a big toll on many economies, with data from Japan
showing unemployment rising to a three-year high as the
country's grapples with its worst recession since World War
Two.
                                
 But Japan's Nikkei average <.N225> climbed 0.9 percent,
highlighting how many investors are looking beyond the bleak
conditions and expect stimulus spending to help spur a recovery
later in the year.
                                
 Japanese Prime Minister Taro Aso is expected to unveil the
outlines of a spending package on Tuesday ahead of the Group of
20 gathering of rich and developing nations this week.
[ID:nSP454873]
                                
 The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 1.4 percent and is up 27 percent from a
five-year low struck last November.
                                
 The Shanghai Composite has rebounded the most in the
January-March quarter with a rise of 28 percent, making its the
best-performing big equity market so far this year after being
the hardest hit in 2008.
                                
 The tech-heavy Taiwan Weighted index <.TWII> was poised to
finish the quarter with a 15 percent gain, boosted by incoming
orders from China as part of its hefty stimulus spending.
                                
 Shares of Taiawn's Compal Electronics <2324.TW>, the
world's No. 2 contract laptop PC maker, rose 4 percent after it
said demand from China ,the United States and Europe is picking
up and its plans to add about 30 percent more employees by
June.
                                
 "In the current downturn, tech shares like Compal whose
sales and profits could still keep rising, are favourable,"
said Andrew Deng, a vice president of Taiwan International
Securities Corp in Taipei.
                                
 BONDS AND DOLLAR DIP
                                
 Government bond yields and swap rates climbed further due
to the waves of expected supply tied to government stimulus
spending and as expectations grow that some Asian central banks
are done cutting interest rates.
                                
 Two-year Korean swap rates <KRQMCD2Y=KMBC> rose a basis
point to 3.240 percent and have jumped 52 basis points in the
past six weeks from record lows hit in February, causing the
swap curve to steepen sharply as the Bank of Korea is seen
keeping rates on hold for a while.
                                
 Ten-year Japanese government bond yields <JP10YTN=JBTC> was
flat at 1.330 percent and held near a six-week high.
                                
 For Japan's 2008-2009 business year ending on Tuesday, the
benchmark yield has edged up about 5 basis points as the
prospect of more supply to pay for spending has offset the
economy's sharp contraction and a likely return of deflation.
                                
 The dollar edged up against the yen but lost ground against
most major currencies, surrendering some of its safe-haven
gains from the previous day.
                                
 The dollar climbed 0.9 percent to 98.15 yen <JPY=>, while
the euro edged up 0.4 percent to $1.3525 <EUR=> on the back of
sharp gainst against the yen. The Australian dollar jumped 2
percent to 67.60 yen <AUDJPY=R>.
                                
 The dollar index, a gauge of its performance versus six
major currencies, slipped 0.3 percent to 85.46 <.DXY>.
                                
 For the quarter, the dollar index has risen 5.3 percent,
its fourth straight quarter of gains.
 (Additional reporting by Gina Chang in Taipei; Editing by Jan
Dahinten)