* Toyota, UMC lift stocks in Japan and Taiwan
* Dollar spurred by solid U.S. services and jobs data
* Caution prevails ahead of Friday's main U.S. jobs data
(Repeats to more subscribers)
By Umesh Desai
HONG KONG, Aug 5 (Reuters) - Asian stocks edged higher on
Thursday after solid corporate earnings, including from Toyota
Motor and chipmaker UMC, and strong U.S. economic data that
lifted the beaten-down dollar.
The upbeat U.S. reports on the services sector and private
jobs eased some worries about a stumbling economic recovery and
prompted Japanese government bonds (JGB) to pull back from
Wednesday's rally, when yields fell to a seven-year low.
Data from the Institute for Supply Management showed the
services sector grew at a faster pace than expected in July. In
a separate report, payroll-processing company ADP said private
employers added more jobs in July than forecast.
[].
Strong results from Toyota Motor Corp <7203.T> boosted
sentiment and propelled Japan's benchmark Nikkei average
<> 1.2 percent higher, reversing much of Wednesday's 2.1
percent drop when investors worried that a yen rally towards
15-year highs would hit exports.
Toyota climbed more than 3 percent before losing some steam
after reporting its biggest operating profit in two years and
lifting its forecasts. [].
In Taiwan, United Microelectronics Corp (UMC) <2303.TW>,
the world's second-biggest contract chipmaker, lifted the
market by reporting strong quarterly earnings and an increase
in its 2010 capital spending plans. []
Japan's benchmark 10-year government bond yield rose from a
7-year low to above 1 percent, with bonds sold on profit-taking
as Tokyo stocks recouped some of the ground they lost a day
earlier and after the dollar rebounded against the yen.
The dollar rose to 86.29 yen from an eight-month low of
85.32 on Wednesday, moving away from the closely watched level
of 84.81, a 15-year low for the dollar struck in November.
The dollar index <.DXY> edged up 0.1 percent to 80.983,
putting it back above its 200-day moving average at 80.768.
However, it still needs to get past 81.650 to break a bear
trend of the past seven weeks. Otherwise, it risks falling to
its April low of 80.031.
The optimism reflected in the U.S. data has offset to some
extent expectations the U.S. Federal Reserve might take further
steps into quantitative easing at its policy meeting next week,
undermining safe-haven U.S. Treasuries and JGBs.
"So not only is the services sector - the vast bulk of most
modern economies - expanding, it is doing so at a faster pace,"
said Adam Carr, a senior economist at broker ICAP, referring to
the U.S. data.
"Commodities are telling us that this global recovery has
reasonable momentum," he said, adding that iron ore prices had
risen around 20 percent in the past month, while copper was up
16 percent and wheat 40 percent.
Commodity-linked currencies such as the Australian and
Canadian dollars remained strong.
The Aussie <AUD=> hovered around three-month highs against
the dollar and the dollar slipped to its lowest in six weeks
against the Canadian currency <CAD=D4>.
On Thursday, the MSCI index of Asia Pacific ex-Japan stocks
<.MIAPJ0000PUS> was up 0.1 percent, after rising 2.3 percent
this week to a three-month high. Consumer staples
<.MIAPJCS00PUS> and resources <.MIAPJMT00PUS> were the drivers.
"Investors are tempted to lock in profits as the market
continues to renew 2010 highs this week," said Kwon Byung-ryol,
an analyst at Eugene Investment And Securities.
"But rising momentum remains intact and the market could
rebound any time, because we have no firm data yet indicating
the economy is set to slow down sharply."
Aggressive bets are also coming off ahead of the U.S. jobs
data on Friday with the government report expected to show a
drop of 65,000 in July as Census jobs dried up.
Oil prices fell for a second straight day, moving towards
$82 a barrel, crimped by the dollar's strength and after U.S.
stocks of gasoline and distillate fuels, including diesel,
added to a string of gains.
(Additional reporting by Aiko Hayashi in TOKYO and Wayne Cole
in SYDNEY)
