(Recasts, adds Europe, quote, updates prices)
By Louise Heavens
SINGAPORE, May 12 (Reuters) - Stocks recovered earlier
losses on Monday, with Japan rebounding as the yen fell against
the dollar and boosted exporters, and Sydney rising 1 percent
on optimism over a potential bank takeover.
But European markets were on course for a lacklustre open,
with financial bookmakers calling Britain's FTSE 100 <>
down slightly, and France's CAC <> and Germany's DAX
<> up marginally.
Tokyo's recovery sent Japanese government bonds lower, but
Treasuries edged higher after news on Friday that American
International Group <AIG.N>, the world's biggest insurer,
posted its largest ever quarterly loss. The news revived fears
about financial institutions' exposure to the credit crisis.
The dollar rose against other regional currencies as weak
Australian and New Zealand economic data signalled the fallout
from the credit crisis was continuing to spread globally.
A slight retreat in the price of crude from record peaks
above $126 a barrel also helped sentiment.
Tokyo <> ended 0.6 percent higher as exporters such as
Canon Inc <7751.T> recovered as the yen retreated, easing a
potential squeeze on profits. The Nikkei 225 had lost nearly 1
percent in early trade.
Shares across the rest of Asia <.MIAPJ0000PUS> were up 0.2
by 0559 GMT. The benchmark is down just more than 8 percent so
far this year, but had rallied sharply in March after it had
fallen to its worst level since August 2007 with the collapse
of U.S. investment bank Bear Stearns.
Singapore's main index <.FTSTI> was up 0.3 percent and
Taiwan's index <> ended 0.4 percent better.
Australia's benchmark <> rose 1 percent, lifted by
news that Westpac Banking Corp Ltd <WBC.AX> was in talks on an
all-share bid for St George Bank Ltd <SGB.AX>, which has a
market value of A$15 billion ($14 billion). []
Markets in Seoul <> and Hong Kong <> were closed
for a public holiday.
DOLLAR FLOOR
The dollar gained against major currencies <.DXY> after its
fall late last week after a survey showed business confidence
in Australia hitting the lowest since September 2001 and
housing finance falling sharply, while a report in New Zealand
showed housing price gains slowing for an eighth straight
month.
The New Zealand dollar slid to a four-month low against the
U.S. dollar after the data, which is expected to bolster the
case for interest rate cuts, but the Aussie <AUD=D4> remains
not far away from a 24-year peak struck against the greenback
last month.
"It may be the beginning of a downtrend for the Aussie but
I'm not convinced the Aussie will collapse from here," said
Masafumi Yamamoto, head of FX strategy for Japan at Royal Bank
of Scotland.
Currency investors are waiting for more clues on the policy
outlooks for the U.S. Federal Reserve and European Central
Bank, while eyeing the relentless rise in oil prices.
The dollar fetched 103.52 yen <JPY=>, while the Aussie
dollar fell to $0.9374 <AUD=D4> and the New Zealand dollar
dropped to $0.7642.
Crude oil <CLc1> dipped to $125.26 a barrel, but was still
within sight of a record high of $126.27 hit on Friday.
Middle East violence is the latest factor to raise concerns
about potential supply disruptions from the world's largest
crude producing region.
Spot gold <XAU=> changed hands at $881.70/882.20 an ounce,
slightly down from late levels in New York on Friday.
Japan's June 10-year futures slipped 0.35 of a point to
136.25. The benchmark 10-year yield rose 3.5 basis points to
1.590 percent <JP10YTN=JBTC>.
