* U.S. economic data boosts New Year optimism
* Australian stocks, shares under pressure on floods
* Nikkei share average at 7-1/2 month high
* Oil at highs on recovery hopes, winter demand
By Kim Coghill
SINGAPORE, Jan 4 (Reuters) - Asian stocks advanced on
Tuesday and oil hovered near a 27-month high, supported by
U.S. data suggesting a recovery in the world's biggest economy
was gathering momentum.
Japanese shares hit a 7-1/2 high on Tokyo's first trading
session of the New Year, a day after the United States
reported manufacturing grew at its fastest clip in seven
months in December. U.S. stocks hit new two-year highs
overnight.
The next big test for the U.S. economy comes later this
week when the government will publish its December jobs report.
"Market players are now focusing on the U.S. payrolls data
due on Friday, which will likely have an impact on both Wall
Street shares and the dollar/yen rate," said Kazuhiro
Takahashi,
general manager at Daiwa Capital Markets in Tokyo.
The Nikkei rose 1.7 percent, led by shares in
resource companies as oil and commodity prices rose on the
stronger economic growth outlook this year.
Stocks are also getting a boost from the "January effect"
when fund managers are no longer distracted by year-end window
dressing and instead focus on stocks they find attractive,
traders said.
The MSCI index of shares excluding Japan
was 0.21 percent higher, led by advances in the South Korean
KOSPI and the Shanghai Composite Index , where
property stocks jumped 5 percent as worries about further
monetary tightening eased after surveys indicated that Chinese
factory inflation may be abating. []
Accelerating inflation and record house prices have led
China's central bank to signal time and again in recent months
that the country needs "prudent" monetary policy to curb
price pressures and prevent asset bubbles.
But a fall in the official purchasing managers' index in
December over the previous month held out hope that inflation,
running at its highest in over two years, may be peaking soon.
Still, investor Jim Rogers said inflation remained a top
concern for Chinese policymakers.
"But I think they'll be more tightening in China because
the Chinese do have a serious inflation problem as you
mentioned they know what I know and everybody knows it. And
they're determined to kill it," he told Reuters Insider TV
[]
While the mood was upbeat across much of Asia, shares in
Australia slipped into negative territory and both the
Australian and New Zealand dollars were under pressure because
of worries over the impact of floods in northeast Australia.
Heavy flooding in Queensland has cut coal exports and
hurt wheat production. Miners such as Rio Tinto have
declared force majeure and cut coal exports to a trickle.
"The lights were flashing a very verdant green at the
start of the session but now it has fizzled. I suspect it will
come back a bit later," said Michael Heffernan, strategist at
Austock Group.
"The floods are likely to have some impact on coal stocks."
DOLLAR GAINS, TREASURIES DECLINE
The U.S. dollar rose 0.2 percent to 81.93 yen ,
having pulled up from an eight-week low of 80.93 yen hit on
trading platform EBS on Monday. Analysts expect more traction
for the greenback in the months ahead as the recovery gathers
strength.
The euro eased slightly after last week's short-covering
surge, with some traders citing talk of euro-selling by
investors related to euro zone bond redemptions. "There is
lots of talk about German bond redemptions today," said a
trader for a European bank in Singapore.
U.S. Treasuries dipped in Asia as investors turned to more
riskier assets ahead of a raft of U.S. data including November
factory orders and December vehicle sales figures due later on
Tuesday and December ADP private-sector employment, which is
seen as a precursor to Friday's jobs data.
The benchmark 10-year Treasury notes were down
5/32 in price to yield 3.35 percent, up about 2 basis points
from late U.S. trade on Monday.
Oil <CLc1> was steady at $91.60, near its highest levels
in more than two years as accelerating manufacturing activity
in the U.S. and frigid winter weather fanned optimism that
U.S. crude inventories will continue to drain.
Copper futures opened at a record high in London on
Tuesday after the New Year break, chasing a rally in New York
which touched an all-time high in the previous session.
(Additional reporting by Ian Chua in SYDNEY, Editing by Kim
Coghill)
