* Oil rally broadly lifts commodity prices
* Resource stocks rise, financial sector shares fall
* U.S. dollar bucks trend and rises with oil
By Kevin Plumberg
HONG KONG, Aug 14 (Reuters) - Oil rose above $116 a barrel
on Thursday, pushing up commodity prices broadly and stoking
inflation fears as investors bailed out of shares in the
financial sector and bought back resource-related stocks.
The popular trade of betting on strength in raw materials
prices because of solid growth in developing countries while
selling off the unstable financial sector had been seriously
tested in the last few weeks as the U.S. dollar rallied to a
six-month high against the euro.
However, a U.S. government report on Wednesday showing a
decline in crude inventories has investors thinking about
resource scarcity again, proving that bets on higher oil prices
are difficult to reverse completely even with the U.S. dollar
showing sustained strength.
"We're seeing a real surge in trading houses, which are
gaining both on higher oil prices and a sense that they'd
become good value after heavy selling recently," said Nagayuki
Yamagishi, a strategist at Mitsubishi UFJ Securities in Tokyo.
The September contract for U.S. light crude <CLc1> rose 80
cents to $116.79 a barrel in early trade, after jumping $3
overnight.
On Tuesday, crude dropped to a three-month low of $112.31
and remains more than 20 percent below a record $147.27 reached
a month ago.
Metals prices marched higher in tandem with oil, with gold
up 0.4 percent to $829.15 an ounce <XAU=> after touching a 2008
low just below $802 on Tuesday.
Resource-related shares in Japan such as Sumitomo Metal
Mining Co Ltd <5713.T> and trading firm Mitsui & Co <8031.T>
were among the top percentage gainers in the Nikkei share
average <>.
However, worries about Japan's economy pushed the index
down 0.3 percent, particularly after data on Wednesday showed
the world's second-largest economy contracted in the second
quarter.
Shares of Softbank Corp <9984.T>, Japan's third-biggest
mobile phone operator, fell 4.2 percent and kept the Nikkei's
gains in check.
The MSCI Asia-Pacific ex-Japan index <.MIAPJ0000PUS> edged
up 0.4 percent but is still down more than 30 percent since
hitting an all-time high last November. It hit a 17-month low
on Wednesday.
Australia's benchmark S&P/ASX 200 index <> jumped 1.4
percent, led by top mining companies BNP Billiton Ltd <BHP.AX>
and Rio Tinto Ltd <RIO.AX>. But the country's major banks all
dragged on the index.
Hong Kong's Hang Seng index <> rose 0.3 percent,
boosted by shares of Chinese offshore oil producer CNOOC Ltd
<0883.HK> as it jumped more than 5 percent.
Crude prices rose despite strength in the U.S. dollar. The
two have often traded very closely together, with a decline in
one coinciding with a rise in the other.
Yet, the euro was down 0.3 percent to $1.4878 <EUR=>,
creeping back down toward the six-month low around $1.4812 hit
on Tuesday.
Against the yen, the dollar slipped 0.1 percent to 109.30
yen <JPY=>, about 1 yen below a seven-month high hit earlier in
the week.
Few indications in the market showed that investors had
regained their willingness to take bigger risks for higher
returns, an environment that favours government bonds and hurts
high-yielding currencies.
Indeed, the Australian dollar <AUD=> was down 0.8 percent
to US$0.8678 and the New Zealand dollar <NZD=> fell 0.7 percent
to US$0.6972.
Meanwhile, 10-year Japanese government bond futures
<2JGBv1> climbed to a four-month high, having risen 4.3 percent
in the last two months.
