* Asian stocks hit fresh 17-mth high on rising risk
appetite
* Dollar extends Monday's losses, draw investors back to
gold
* Oil rises towards $82 as temperatures plunge
* European shares set for slightly weaker opening
By Susan Fenton
HONG KONG, Jan 5 (Reuters) - Asia stocks rose to a 17-month
high on Tuesday as growing confidence about the prospects for
the global economy drew investors to riskier assets and away
from the dollar, which extended its weak start to the year.
European shares were set to open slightly lower, according
to financial spreadbetters, while U.S. equity futures <SPc1>
were virtually flat.
The dollar <.DXY> dropped 0.4 percent against a basket of
major currencies, extending Monday's slide after upbeat
manufacturing data from the United States, India and China
bolstered optimism about a global recovery and encouraged
buying of higher-yielding currencies, commodities and stocks.
"Investors are seeking more risks thanks to better economic
conditions," said Tsutomu Soma, senior manager of foreign
securities at Okasan Securities in Tokyo.
However, he said the optimism could change if U.S. job data
due on Friday disappoints.
"Investors feel they need to have the employment data to
confirm the U.S. economy is improving solidly," Soma said.
Japan's Nikkei share index <> rose 0.25 percent on the
day to close at a 15-month high, helped by resource-related
shares after the price of copper <MCU3>, palladium <XPD=> and
platinum <XPT=> surged on Monday to their highest levels since
2008.
However, stocks came off earlier highs as a stronger yen
<JPY=> hurt exporters.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS>, which rallied about 68 percent last year, was
up 1.3 percent at levels last seen in July 2008.
Investors poured a record $19 billion into Asia ex-Japan
equity funds last year, global fund tracker EPFR said on
Tuesday, as the region led a recovery in the global economy.
A string of bullish data from China, India and South Korea
since the start of this year is encouraging investors to add
exposure to Asian assets, although uncertainty about the
sustainability of economic recovery in Western economies poses
a risk for equities globally, analysts say.
The strength of commodity prices lifted stocks in
resource-rich Australia, where mining stocks helped drive the
benchmark S&P/ASX 200 index <.AXJ0> up 1 percent.
The Thomson Reuters index of Asian shares outside of Japan
<.TRXFLDAXPU> rose 1 percent.
OIL NEARS $82
A rally in U.S. shares on Monday boosted investment
sentiment in Asia, which relies heavily on U.S. end demand for
its exports industries.
U.S stocks rallied on their first trading day of 2010 after
the Institute for Supply Management manufacturing index for
December hit its highest level since April 2006.
However, the economic recovery in the United States, as
well as in Europe, was tepid and so could limit the upside
potential of equities, said David Spry, research manager at FW
Holst in Australia.
"I don't think we're going to get a strong, sustained
upswing until those economies start to contribute a bit more
down the track," Spry said.
Uncertainty about Friday's U.S. jobs report for December
capped buying of U.S. Treasuries in Asia. The November report
showed a surprisingly small drop in jobs so further signs of an
improving labour market in this week's report could trigger
expectations for an early rise in U.S. interest rates.
The median forecast in a Reuters poll was for the report to
show a fall of 8,000 jobs in December. []
Benchmark 10-year treasuries rose 5/32 in price to yield
3.798 percent <US10YTN=RR>, down 2 basis points from late New
York trade on Monday.
With risk appetite growing once again, higher-yielding and
emerging-market assets benefited. Investors bought into the
high-yielding Australian dollar <AUD=>, which hit a three-week
peak at $0.9164 to the dollar.
In Korea, foreign exchange authorities were spotted
intervening to stem the won <KRW=> as it rallied 1.3 percent
against the dollar, its biggest daily gain since July last
year.
Expectations that the central bank could soon raise
interest rates are helping drive the currency higher following
a string of bullish data on Asia's fourth-largest economy. Only
Australia in the G20 has raised rates so far following the
global financial crisis.
Exceptionally cold weather in the United States and other
big consuming nations pushed oil prices <CLc1> up for a ninth
straight session to near $82 a barrel, a sharp increase from
below $70 in mid December.
The fall in the dollar is drawing buyers back to gold
<XAU=>, which rose in Asia to $1,125.10 an ounce, its highest
level since Dec. 17. A fall in the dollar makes gold cheaper
for investors using other currencies.
Reflecting its inverse relationship with the dollar, the
precious metal dropped 7 percent in December as the dollar
rallied 4 percent against major currencies.
(Additional reporting by Sonali Paul in MELBOURNE and Rika
Otsuka in TOKYO; Editing by Neil Fullick)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
