* Most regional equities extend rise, Nikkei slips
* MSCI's Asian index ex-Japan near 3-year high
* Yen hits 6-week low vs dlr, 10-month low vs euro
* U.S. oil touched 2-1/2 year peak, gold falls
By Richard Leong
HONG KONG, April 1 (Reuters) - Asian shares outside Japan
rose to their highest in nearly three years on Friday, looking
to extend a three-quarter winning streak, while the yen slipped
on the view Japanese interest rates will stay near zero for a
long time to help the quake-ravaged economy.
MSCI's index of Asia-Pacific stocks outside Japan
hit its highest level since May 2008 on optimism
about global economic growth. It was up 0.63 percent to 489.10
at 0630 GMT.
Japan's Nikkei was up till shortly before the close,
but then slipped back into negative territory, falling 0.48
percent to 9708.39. A weaker yen is seen as supportive of the
nation's exporters during a period of domestic rebuilding but
the country's struggle to recover will be a long-term one.
The resilience of most Asian stock market in the face of
geopolitical risks indicates further gains are likely, but some
investors cautioned the upswing might be overdone and is
vulnerable to deterioration with Japan's nuclear predicament,
Europe's debt crisis and/or Middle East's political situation.
"The markets have absorbed these events pretty well, but
things are still very fluid," said Binay Chandgothia, portfolio
manager at Principal Global Investors in Hong Kong. The firm
manages more than $200 billion in assets worldwide.
In commodity trading, U.S. prices started the new quarter by
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, which had a 10th straight quarterly gain in the
January-March period, fell on more tough inflation talk from
U.S. central bankers.
While risky assets generally shone on the first day of the
new quarter, 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.
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 has
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 0.21 percent at
76.018. It climbed to a six-week high against the Japanese
currency as 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 83.53 yen.
The euro also strengthened against the yen,
hitting a fresh 10-month high of 118.66, in the wake of a
weaker-than-expected BOJ tankan business survey.
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 touched above
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 the
March 11 natural disasters and the ongoing nuclear crisis.
In the latest developments, a local newspaper reported that
the government will take control of Tokyo Electric Power
whose shares and public image have been hammered after
a series of missteps and mistakes at its quake-stricken
Fukushima nuclear plant. []
At a G20 meeting in Nanjing, China, Japan's top currency
diplomat said on Thursday his country, while satisfied with last
month's rare coordinated move to stem yen's rise, will stay
vigilant for further invention needs. []
In addition to Japan, tension in Africa and the Middle East
and the festering public debt problems in Europe are other
factors that threaten global growth. But those concerns have
receded 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 15 cents at $106.88 a barrel after
earlier touching $107.65, an intraday peak since September 2008.
Brent crude <LCOc1> fell 13 cents to $117.23.
Spot gold traded at $1,432.80 an ounce, down from
$1,436.48 late in New York on Thursday, after hitting a record
high of $1,447.40 in March.
(Reporting by Chikafumi Hodo and Masayuki Kitano in TOKYO,; Ian
Chua in SYDNEY,; Lewa Pardomuan and Alejandro Barbjosa in
SINGAPORE; Editing by Sugita Katyal and Richard Borsuk)
