* MSCI Asia ex-Japan up 1.7 pct, hits 11-month high
* Upbeat earnings lift Nikkei to 10-month peak
* S.Korea industrial output robust, won hits 9-mth high
* Foreign investors pour more funds into Asian shares
(Repeats to additional subscribers)
By Eric Burroughs
HONG KONG, July 31 (Reuters) - Asian stocks pushed higher
on Friday and were poised to score double-digit gains in July
as investors keep pouring funds on bets the region's growth
engine will lead the global economy out of recession.
South Korea's benchmark KOSPI index hit a one-year high and
Japan's Nikkei average rose to a 10-month peak as upbeat
corporate earnings reports around the world have been viewed as
more evidence that companies are coping well and poised to
benefit from any recovery.
Shares of Sony Corp <6758.T> jumped 6.4 percent after it
posted a smaller-than-expected loss the previous day, even as
shares of Nintendo Co <7974.OS> slid after saying quarterly
profits fell due to slowing demand for its popular Wii game
console.
South Korea offered more evidence of the Asia's
strengthening recovery, lifting the won <KRW=> to a 9-1/2-month
high. Industrial production jumped 5.7 percent in June, more
than twice as fast as expected and a sixth straight monthly
increase. []
"Earnings for the April-June quarter have been stronger
than expected and there has been a fair number of upward
forecast revisions, all of which is improving sentiment and
keeping the market supported," said Yumi Nishimura, deputy
general manager in the investment advisory section at Daiwa
Securities SMBC in Tokyo.
Market players are looking ahead to U.S. data on the
economy's performance in the second quarter, due later in the
day. Some economists believe it could mark the end of the sharp
contraction as signs point to growth resuming in the second
half of the year.
Oil prices extended gains along with other commodities,
giving a boost to energy shares such as Sinopec Corp <0386.HK>.
The dollar and government bonds lost ground as investors turned
to risky assets, such as higher-yielding currencies and
equities.
Foreign investors are favouring emerging markets and Asia
in a big way, with inflows into Asian equity funds excluding
Japan totalling $1.6 billion in the week ending on Wednesday --
the biggest inflow among emerging market groups. Much of that
money is being pulled out of money market funds. []
Japan has also seen revived foreign buying of stocks. Data
from the Ministry of Finance showed that foreign equity
purchases last week were the biggest in three months. []
A monthly Reuters asset allocation poll found that leading
global funds have boosted their holdings of stocks back to the
highest levels since the collapse of Lehman Brothers while
cutting cash holdings to the lowest until May 2007.
[]
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 1.7 percent to reach an 11-month high and
the highest level since just before the collapse of U.S.
investment bank Lehman Brothers.
For July, the MSCI benchmark for Asia was up 12 percent,
scoring its fourth double-digit gain in the past five months on
China's economic rebound. This year's elections in Indonesia
and India have also been seen as spurring investor-friendly
reforms and haves parked big gains in those markets.
The Shanghai Composite Index <> climbed 2 percent and
was up slightly on the week, erasing Wednesday's 5 percent
sell-off, a slide that raised worries that the nearly 90
percent bull run in Chinese shares could start to reverse.
Even the worries that China and some parts of Asia were in
the early stages of stock and property bubbles has done little
to stem the move higher. []
Credit markets have also been on a tear higher.
The iTraxx index of spreads <ITAIG5Y=MP> on high-grade
companies in Asia ex-Japan has shrunk 54 basis points this
month to 132.5 basis points, the lowest since mid-2008 as
investors have favoured corporate debt.
The dollar slipped as funds moved out of the safe-haven
U.S. currency. The dollar index dropped 0.5 percent to 78.932
<.DXY> and retreated back near a seven-month low hit earlier in
the week. The euro climbed 0.5 percent to $1.4138 <EUR=>, and
the dollar dipped 0.4 percent to 95.21 yen <JPY=>.
Japanese government bonds fell further as stocks continued
their run higher. The benchmark 10-year yield <JP10YTN=JBTC>
rose 3 basis points to 1.415 percent to a one-month high, with
yields up 6.5 basis points on the month.
U.S. crude oil prices were up 82 cents to $67.76 a barrel
<CLc1>, while gold gained $6 an ounce to $939.10 <XAU=>.
(Additional reporting by Elaine Lies and Rika Otsuka in
Tokyo; Editing by Kazunori Takada)
