* Asian shares modestly higher but Nikkei dips
* MSCI's Asian index ex-Japan near 3-year high
* Dollar index firms after more hawkish Fed comments
* U.S. oil touches 2-1/2 year peak, gold falls
By Richard Leong
HONG KONG, April 1 (Reuters) - Asian shares rose on Friday,
looking to extend three straight quarters of gains, while the
dollar strengthened against most major currencies after hawkish
comments from a senior U.S. Federal Reserve official.
MSCI's index of Asia-Pacific stocks outside Japan
was up 0.27 percent on the day after touching
its highest level since May 2008, prompted by optimism on global
economic growth.
Japan's Nikkei , however, was down 0.1 percent,
erasing early gains.
Oil kicked off the new quarter in positive fashion with U.S.
prices climbing after closing at their highest in 2-1/2 years on
Thursday against the backdrop of continued fighting in Libya and
unrest in the Middle East.
Gold fell on more tough inflation talk from U.S. central
bankers after notching a 10th quarterly gain.
Investors are treading cautiously ahead of the latest
payroll data from the United States later on Friday.
Another month of solid U.S. hiring, expected in the 200,000
area, should reinforce expectations of further global economic
expansion but also of an accelerated shift in policy focus among
central bankers to stem inflationary pressure.
"At the moment we're getting dragged higher by the momentum
we're seeing in the U.S. economy," said IG Markets analyst Ben
Potter in Melbourne.
"We could be at the risk of some profit-taking today as
people look ahead to tonight's session but that doesn't seem to
be the case at the moment."
Signs of improving business activity and rising inflation
globally have led the U.S. Fed and the European Central Bank to
ratchet up their inflation rhetoric, causing traders to
second-guess whether U.S. and European rates will be on hold
this year.
In the U.S., Minneapolis Fed President Narayana Kocherlakota
told the Wall Street Journal on Thursday that the Fed could
raise rates by the end of 2011, far sooner than expected by
financial markets. Most analysts do not expect rate hikes until
the second half of 2012. See []
INFLATION TALK BOOSTS DOLLAR
A recent spate of hawkish comments from Fed officials have
helped boost the dollar and U.S. bond yields with two-year
yields rising to 0.84 percent, the highest in six weeks.
The dollar index , which tracks its performance
against a basket of major currencies, was up 0.3 percent at
76.071. The greenback has rebounded against the yen, a move that
has propelled Asian stock markets because it would help the
region's exporters.
The dollar climbed to a six-week high against the Japanese
currency in early trading. It has recovered from a record
low of 76.25 yen on March 17 before G7 central banks intervened
to halt the yen's rise. It last traded at 83.66 yen.
The euro also strengthened against the yen,
hitting a fresh 10-month high, in the wake of a
weaker-than-expected tankan business survey from the Bank of
Japan.
Growing expectations of the Fed hiking rates and the BOJ
leaving rates steady have widened the yield differential between
two-year U.S. and Japan government debt. That gap was last near
63 basis points, the widest since early February.
Japan will likely stick to a near-zero rate policy as the
world's No. 3 economy faces the risk of a slowdown due to last
month's natural disasters and the current nuclear crisis.
In the latest development, a local newspaper reported the
government will take control of Tokyo Electric Power
whose shares and public image have been hammered after a series
of missteps and mistakes in its handling of the quake-stricken
Fukushima nuclear plant. For more, see []
The ongoing tension in Africa and the Middle East and the
festering public debt problems in Europe are other factors that
threaten global growth.
Those concerns have receded at least for now, analysts say,
as most economies have showed steady growth, which will further
stoke the rise in oil, food and commodity prices.
U.S. crude <CLc1> was up 28 cents at $107.00 a barrel, but
Brent crude <LCOc1> dipped 6 cents to $117.30.
Spot gold traded at $1,430.70 an ounce, down from
$1,436.48 late in New York on Thursday, after hitting a record
high of $1,447.40.
(Reporting by Chikafumi Hodo in TOKYO,; Ian Chua in SYDNEY,;
Lewa Pardomuan and Randy Fabi in SINGAPORE; Editing by Sugita
Katyal)
