* Exporters, technology stocks help regional equities
* Late-maturity US Treasuries slip further on supply
worries
* Oil steady near $49 as Middle East violence drags on
(Repeats to more subscribers, updates prices, adds quote,
comments, European outlook)
By Kevin Plumberg
HONG KONG, Jan 6 (Reuters) - Asian stocks inched higher for
a seventh day on Tuesday on hopes for a global economic
recovery later in 2009, but the yen's gains against
high-yielding currencies suggested scope for optimism was
limited.
European stock futures <STXEc1> pointed to a higher open,
as investors continued to move money stashed in low-risk
government bonds into equities in search of higher returns.
Low interest rates around the world and massive government
economic stimulus plans have revived some investors'
willingness to take on risk again after one of the worst years
on record for equities in 2008.
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 have fed into the tentative recovery in
global equity markets. 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. In Asia, Toyota Motor Corp <7203.T> said
it would close its factories in Japan for 11 days.
[]
Wary investors are also continuing to keep substantial
space in their portfolios dedicated to cash, fearing early 2009
gains will be short-lived. Total net assets in U.S. money
market funds were $3.83 trillion last week, up $430 million in
the last three months, according to the Investment Company
Institute, an industry trade group.
"The risk that the financial system will fall off a cliff
seems to be fading, but the global economic recession has just
barely started," Dong Tao, chief regional economist with Credit
Suisse in Hong Kong, said at a news briefing.
"In the first half of 2009, the depth of this economic
contraction will surprise many people," he said.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> edged up for a seventh straight day, up 0.45
percent to a two-month high, 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 0.4 percent, led by
a 5 percent jump in major exporter Canon Inc <7751.T>.
CAUTION ON DOLLAR
Caution about details of the new U.S. stimulus plan and its
timing saw the U.S. dollar slip against the yen, after hitting
a near one-month high the previous day on expectations that the
plan would help revive the faltering economy.
Democrats had hoped to have the fiscal rescue package ready
for Obama to sign into law when he takes office on Jan 20, but
they now admit it will take at least a month longer.
[]
"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 in Tokyo.
"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 around 0.4 percent to 93.06 yen <JPY=>,
while the euro fell 1 percent to 126.00 yen <EURJPY=R>.
Against the yen, the Australian dollar was down around 0.9
percent to 66.41 yen <AUDJPY=R> after hitting a two-month high
on Monday.
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 3.04 percent, and the 10-year yield more than 40 basis
points to 2.49 percent as institutional investors sour on the
idea of the Federal Reserve buying Treasuries to keep rates
low.
The benchmark 10-year Japanese government bond yield
<JP10YTN=JBTC> rose 5 basis points to 1.25 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 slipped after jumping 5 percent 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 a
barrel <CLc1>, down 1.7 percent after plumbing four-year lows
around $32 last month.
(Additional reporting by Kaori Kaneko in TOKYO)
(Editing by Kim Coghill)
