GLOBAL MARKETS-Asia shares up most in 7 wks; China, Fed buoy

                                
 * Asia shares jump on China PMIs, hopes of Fed easing
                                
 * U.S. dollar at 15-year low against the yen
                                
 * Yen intervention talk fades; trading glitch suspected
                                
 * European stocks open firm, follows Asia on China PMI
                                
 By Koh Gui Qing
                                
 SYDNEY, Nov 1 (Reuters) - Asian shares rose the most in
seven weeks on Monday, driven higher by surprisingly strong
China manufacturing data and hopes that super-easy U.S.
monetary policy will loosen even further this week.
 Investor demand for riskier assets was palpable across
markets. Government bonds fell, commodity prices and currencies
rose, and the U.S. dollar plumbed a 15-year low against the
yen.
                                
 Europe's stock markets picked up Asia's baton. The
FTSEurofirst 300 <.FTEU3> rose 0.5 percent in opening deals,
while the main indexes in Britain, Germany and France gained
0.5 percent to 0.8 percent. <.FTSE> <.FCHI> <.GDAXI>
                                
 A spike in the U.S. dollar against the yen in early Asian
trade stirred speculation that Tokyo had intervened to sell the
yen. But the currency's rise was brief, so traders quickly
suspected the spike was caused by a trading glitch. [USD/]
                                
 Still, investors were nervous that Japanese authorities
might intervene soon given that the dollar was changing hands
at 80.45 yen, within spitting distance of its post-war record
low of 79.75 <JPY=>.
                                
 Surveys pointing to healthy manufacturing expansion in both
China and India prompted the MSCI index of Asian shares outside
Japan <.MIAPJ0000PUS> to rally 1.7 percent by early afternoon
Asia time, its biggest gain in any single day since September
13.
                                
 China's manufacturing growth hit a six-month high in
October, purchasing managers' indexes showed, suggesting the
world's second-biggest economy was powering ahead even as the
United States and most of Europe languished.
                                
 Investors expect the U.S. Federal Reserve to give the U.S.
economy a shot in the arm on Wednesday with an injection of
cash, a policy known as quantitative easing. Many expect the
Fed to offer to buy $500 billion of Treasury debt over five
months.
                                
 "Quantitative easing is what the market's focused on.
That'll lift all boats," said James Holt, a Sydney-based
investment specialist at BlackRock, the world's biggest fund
manager.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 PDF: The Fed tough decision  http://link.reuters.com/pyb23q
                                
 Europe shares rise after strong China data  [ID:nLDE6A009B]
                                
 Dollar slides as early jump impact fades    [ID:nTOE6A006B]
                                
 PMI: China, India lead way, Asia strong     [ID:nTOE6A0044]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 The Fed risk encouraged investors to sell the U.S. dollar
and buy commodities, in part on the belief the move will fuel
growth.
                                
 The U.S. dollar index <.DXY> was under pressure at 76.838.
A break below its Oct 25 low of 76.709 could herald more
losses, analysts say.
                                
 The prospect of more dollar weakness made dollar-based
commodities attractive. Spot silver <XAG=> jumped to 30-year
peaks, palladium <XPD=> to nine-year highs, gold hit a two-week
high [GOL/] and oil rose towards $82 a barrel [O/R].
                                
 "Sentiment is cautiously bullish before the Fed meeting,"
said a gold dealer in Hong Kong. "People are still talking
about the price target of $1,400."
                                
 Commodity currencies joined the rally, led by the
Australian <AUD=D4> and New Zealand dollars <NZD=D4>.
                                
 The preference for risk saw buying demand in U.S. and
Japanese government bonds taper off. [US/] [JP/]
                                
 Still, the performance in U.S. Treasuries is by no means
dismal this year, with U.S. two-year yields <US2YT=RR> near a
record low.
                                
 LANGUID JAPAN
                                
 For all the economic growth in Asia, Japan is bucking the
trend. Asia's second-largest economy is struggling with
deflation and growth is elusive.
                                
 A 13 percent rally in the yen this year against the dollar
has weighed on the exports sector, a major driving force behind
the economy.
                                
 The economic woes underlined a 0.5 percent fall in the
Nikkei average <.N225> on Monday. For the year, it is Asia's
worse performing stock market, having fallen 13 percent
compared with an 11 percent rise in the MSCI ex-Japan index.
                                
 Starmine data shows Japanese stocks trade at a forward
price-to-earnings ratio of 6.9 times, the lowest in Asia, and
less than half of the 15 times in China and Indonesia.
                                
 To be sure, Japan is not alone. For the year, data from
EPFR Global showed investors have pulled cash from European,
Japanese and U.S. share markets, with the U.S. market worst
hit. Emerging markets, on the other hand, have pulled in over
$60 billion worth of funds.
 (Additional reporting by Tokyo Markets team))
 (Editing by Neil Fullick)