RPT-GLOBAL MARKETS-Asia stocks up on bank earnings, U.S. data

                                
 * MSCI Asia ex-Japan near 3-month high, up 0.3 pct for 2010
                                
 * European bank results, U.S. manufacturing data boost
shares
                                
 * Nikkei up 1.3 pct, upside potential seen limited
                                
 * Dollar hovers near 3-month low
  (Repeats to more subscribers)
                                
 By Vikram S.Subhedar
                                
 HONG KONG, Aug 3 (Reuters) - Asian stocks rose to their
highest levels in nearly three months on Tuesday, boosted by
strong European bank results and a sign the U.S. economy was
stronger than expected.
                                
 European shares edged lower as investors took a breather
after Monday's strong rally sparked by robust results from
financial heavyweights HSBC <HSBA.L> and BNP Paribas <BNPP.PA>.
[ID:nLDE672031]
                                
 The bank results and stronger-than-expected manufacturing
data from the United States boosted Wall Street on Monday and
in turn fired up Asia on Tuesday. [ID:nN02170396]
                                
 "A combination of solid earnings from HSBC and BNP Paribas
and strong U.S. manufacturing data has significantly eased
economic worries and boosted appetite for stocks," said Lee
Sun-yeb, a market analyst at Shinhan Investment Corporation.
                                
 The MSCI Asia ex-Japan index <.MIAPJ0000PUS> rose 0.2
percent to its highest level since early May. It has rallied
strongly from early July on optimism the world would avoid a
'double-dip' recession and is just in positive territory for
the year.
                                
 However, after rallying nearly 18 percent from 2010 lows
hit in May, the MSCI Asia ex-Japan index could face some upside
resistance with the relative strength index (RSI) nudging 70,
suggesting the market is close to being overbought.
                                
 U.S. stocks closed at their highest level in 10 weeks on
Monday as the S&P 500 <.SPX> pierced key technical levels.
Energy stocks jumped as a weak the dollar drew investors into
crude futures, which rose 3 percent <Clc1>.
                                
 Reflecting the greater risk appetite seen in stocks, Asian
debt spreads tightened to their narrowest spreads in nearly
three months.
                                
 "There is money to be put to work. Funds kept a
higher-than-normal cash balance over the past few months
because they were worried about redemptions, but the
redemptions did not happen," said a bond trader from Singapore.
                                
 "Now, it is a question of do you hold cash and miss the
rally or put the money to work before the rally ends."
                                
 YEN LIMITS NIKKEI GAINS
                                
 Japan's Nikkei <.N225>, which has lagged regional markets
in recent weeks, climbed 1.3 percent. Mmarket players said
though that the strength of the yen, which at 86.46 per dollar
is close to an eight-month low of 85.95 hit last week, may
limit further stock gains.
                                
 The Nikkei is down over 8 percent in 2010 and has risen 5.6
percent in the past two weeks on strong corporate results from
heavyweights such as Sony <6758.T> and Honda Motor <7267.T>.
                                
 However, analysts are cautious.
                                
 "This rise is difficult to trust, since it was based mainly
on short-covering in thin volume. If something bad happens, the
markets are likely to fall just as fast," said Yutaka Miura, a
senior technical analyst at Mizuho Securities.
                                
 "Because the yen remains strong, gains in Tokyo -- likely
to be mostly short-covering anyway -- will be limited."
                                
 Shares of trading houses gained after copper and oil prices
hit three-month highs on Monday as data eased fears of a
double-dip recession by showing that global manufacturing was
still expanding. [COM/WRAP] [ID:nN02170396]
                                
 Mitsubishi Corp <8058.T> jumped 4.7 percent and Itochu Corp
<8001.T> closed 5.6 percent higher, its best single-day rise in
over a year.
                                
 The dollar was hovering near a three-month low against a
basket of currencies <.DXY>, hobbled by worries over the
strength of the U.S. recovery after a series of economic data
in the past month undershot market expectations and suggested
that the Federal Reserve would keep rates low for some time to
come.
                                
 "The low-for-long Fed, coupled with talk of more
quantitative easing, yields itself to a dollar-funded carry
trade," Dariusz Kowalczyk, senior strategist at Credit
Agricole, said in a note. He added that the dollar is likely to
stay under pressure in the short term.
                                
 U.S. data, such as June personal income, June factory
orders and July auto sales, expected later on Tuesday, will
offer further clues about the health of the U.S. economy.
 (Additional reporting by Jungyoun Park in SEOUL and Jun Ebias
in HONG KONG; Editing by Neil Fullick)