* Asia stocks hit 2-mth high, up 28 pct from 5-yr low in
Nov
* Nikkei also at 2-mth high, but signs may lose steam
* S&P surges 7 pct on toxic debt plan, housing data
* Yen tumbles as carry trades make comeback
* Dollar down, China touts SDRs as reserve alternative
By Eric Burroughs
HONG KONG, March 24 (Reuters) - Asia stocks struck
two-month highs on Tuesday and higher-yielding currencies
jumped against the yen as Washington's plan to relieve banks of
toxic debt spurred investors to pick up riskier assets.
The gains in major Asian equity markets followed a 7
percent surge in the U.S. S&P 500 <.SPX>, which was also
supported by a surprise rise in home sales that spurred hopes a
recovery is taking hold in the battered housing market at the
heart of the global credit crisis. []
Financial shares extended their rally after investors
cheered the U.S. Treasury's plan to free banks of up to $1
trillion in troubled mortgage securities and other loans, part
of an array of measures designed to jump start lending and the
economy.
Major European indexes were expected to open up between 1
percent and 1.7 percent, financial bookmakers said.
Oil prices dipped 15 cents to $53.65 a barrel <CLc1> after
reaching a four-month high the previous day. []
The revival in risk-taking boosted currencies such as the
Australian and New Zealand dollars against the yen as carry
trades -- borrowing in low-yielding currencies and buying
higher-yielding ones -- showed signs of making a comeback.
[]
As financial markets have stabilised, gauges of volatility
have dropped and made carry trades seem more appealing.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> climbed 2 percent, taking gains to 28 percent
from the five-year low hit last November.
But analysts were cautious about saying whether this
rebound in stocks was the definitive one.
"Even though the market rally seems to be a rather powerful
one and may last in the short term, we would remain cautious on
a more medium-term basis. In Asia, the data flow remains very
gloomy," said market strategists at Calyon in a note to
clients.
Asian currencies edged up and have recovered somewhat as
foreign investors slowly shifted money back to the region.
Japan's Nikkei share average <> climbed 3.3 percent
and struck a two-month high. But the rebound in stocks showed
some signs of running out of steam.
The Nikkei's 21 percent rise from its lows hit earlier this
month meets the traditional definition of a bear market rally,
and some technical indicators suggested the benchmark index has
reached overbought levels.
S&P futures <SPc1> were down 0.2 percent, pointing to a
weaker start on Wall Street.
BONDS AND DOLLAR DOWN
Safe-haven government bonds were on the defensive as global
stocks rallied, but they have been supported by extraordinary
measures by central banks to buy large chunks of debt outright
to keep a lid on market yields.
The purchases, which in some cases have meant outright
monetisation of swelling government budget deficits, serve as
one means of helping economic growth with short-term interest
rates already near zero.
Ten-year Japanese government bond yields were flat at 1.260
percent <JP10YTN=JBTC>, as some investors took advantage of an
initial back-up in yields to buy paper as they eye the start of
Japan's new business year in April.
The dollar slid back towards a two-month low hit against a
basket of major currencies last week when investors seized on
the Federal Reserve's decision to buy large amounts of
Treasuries as a sign of the erosion of the world's reserve
currency.
As the debate about the dollar's role intensifies, Chinese
central bank governor Zhou Xiachuan said on Monday that the
dollar could be replaced as the world's main reserve unit by
the IMF's Special Drawing Right. []
The comments suggest that big holders of dollar reserves,
such as China, are mulling alternatives in considering a big
shift in the global financial architecture that has ruled the
post-World War Two period.
The dollar index -- a gauge of its performance against six
major currencies -- dipped 0.1 percent to 83.395 <.DXY>. Among
higher-yielding currencies, the Australian dollar <AUD=> was up
1.2 percent and hit a 4-
