* Asia ex-Japan shares post 7th day of gains
* Late-maturity US Treasuries slip further on supply
worries
* Oil steady near $49 as Middle East violence wares on
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, Jan 6 (Reuters) - Asian stocks edged up for a
seventh day on Tuesday, boosted by hopes for a global economic
recovery later in 2009, though the rising yen and falling
high-yielding currencies suggested such optimism was limited.
Investors continued to move money stashed in government
bonds to equities as their willingness to take risks recovered
with low interest rates around the world and governments
essentially writing blank cheques for plans to revive sagging
economies.
Long-dated U.S. Treasuries were under pressure after the
30-year yield surged overnight, rising above 3 percent for the
first time since mid December, as the market demanded more
incentive to lend to the increasingly indebted U.S. government.
Expectations that U.S. President-elect Barack Obama will
offer $310 billion in tax cuts as part of a $775 billion plan
to support the economy has fed into a recovery in investors'
willingness to take risks. Germany also was reportedly
considering tax cuts to revive Europe's largest economy.
[]
Still, the global economy showed few signs of near-term
improvement. U.S. auto sales posted their weakest year since
1992 and total job losses were expected to be the highest in
the post-war period.
"Indicators of market stress continue to improve whilst
bond yields continue to back up in line with the improvement in
risk appetite over recent weeks and consistent with an asset
class rotation from bonds to equities," said Calyon strategists
in a note.
"We remain cautious about the potential for this to
continue and suspect that the flow of money back into riskier
assets that has gained momentum over recent weeks will stall
soon."
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose for a seventh straight day, up 1.1 percent
to a two-month high and shrugging off weakness on Wall Street
where investors took profits on last week's run-up.
The index has rallied 34 percent since hitting a five-year
low in November, though trading volumes may remain thin in
January because of public holidays throughout Asia.
Japan's Nikkei average <> climbed 1.1 percent, led by
Fast Retailing Co Ltd <9983.T>, which saw solid same-store
sales at its clothing chain as a result of aggressive
discounts.
South Korean stocks <> rose 2 percent. Technology
companies were among the biggest boosts to the index, with
Samsung Electronics <005930.KS> up 4.8 percent.
CAUTIOUS DOLLAR BUYING
The U.S. dollar slipped against the yen, after hitting a
near one-month high the previous day on expectations that a
planned U.S. stimulus package would help revive the faltering
economy.
"There are expectations for the new administration's
economic measures such as possible big tax cuts, and this may
underpin the dollar in the near term," said Yuji Saito, head of
the FX sales department at Societe Generale.
"But the economic package has not yet been endorsed, so
investors are cautious about buying the dollar aggressively,"
he said.
The yen, which has served as a refuge for investors from
wild financial market volatility, strengthened broadly.
The dollar was down 0.3 percent to 93.16 yen <JPY=>, while
the euro fell 0.5 percent to 126.65 yen <EURJPY=R>.
The euro was off 0.3 against the dollar at $1.3603 <EUR=>,
having fallen 11 cents from a 3-month high reached in December.
Though the yen was supported, other popular havens like
Japanese government bonds and U.S. Treasuries were under
pressure as the attraction of cheap stocks sucked in investors.
The real fireworks have been in long-maturity U.S. debt.
The 30-year yield has jumped 50 basis points in the last week
to 3.03 percent, and the 10-year yield 43 basis points to 2.49
percent as institutional investors sour on the idea of the
Federal Reserve buying late-maturity Treasuries to keep rates
low.
The benchmark 10-year Japanese government bond yield
<JP10YTN=JBTC> rose 4.5 basis points to 1.245 percent ahead of
a auction of 10-year bonds on Thursday. A week ago the 10-year
yield hit a five-year low of 1.155 percent.
Oil prices were steady after settling more than 5 percent
higher the previous day as the Israeli-Palestinian conflict and
a dispute between Russia and Ukraine over natural gas helped
lift prices.
Israel's violent campaign to stop its towns from being
showered with rockets showed no signs of ending though, as the
country's troops backed by air strikes fought to seize ground
from Hamas militants deep inside the Gaza Strip. []
U.S. light crude for February delivery was trading at
$48.68 a barrel <CLc1> after plumbing four-year lows around $32
last month.
(Additional reporting by Kaori Kaneko in TOKYO)
(Editing by Kim Coghill)
