* Asia stocks climb 1 pct as Bernanke reassures on banks
* Yen extends slide on grim economy, hedge fund selling
* Chart technicals help underpin stocks, hurt yen
* Gold and govt bonds retreat
By Eric Burroughs
HONG KONG, Feb 25 (Reuters) - Asia stocks edged up on
Wednesday as reassuring comments from Federal Reserve Chairman
Ben Bernanke sparked a rebound in battered financial shares,
while the yen slid further on Japan's mounting economic and
political troubles.
European shares were set to rise a little more than 1
percent, following on the gains in Asia and the United States,
according to financial bookmakers.
Safe-haven government bonds retreated as investors shifted
funds into riskier assets, while gold steadied after having
soared in the past few weeks on mounting fears about the
financial health of countries trying to contain the crisis.
Bernanke said major banks should weather the severe
recession without being nationalised, remarks that put to ease
some worries that the largest institutions may need to be taken
over because of their heavy losses suffered in the global
credit crisis. []
The yen hit a three-month low beyond 97 to the dollar as
investors have turned against Japan on the country's deepening
recession that is the worst among major economies, forcing
hedge funds and other market players to unwind bets favouring
the yen.
Japanese exports plunged a record 45.7 percent in January
from the previous year, data showed on Wednesday, pointing to
another sharp contraction in economic activity in the first
quarter of the year. []
But Japanese shares were helped in part after the finance
minister said the government was looking into share buying to
support the market, a move that would ease the strain on the
country's big banks suffering from hefty equity losses.
"It's good news, but what the market really wants is
large-scale economic measures with the Japanese economy having
deteriorated the most among developed countries," said Takahiko
Murai, general manager of equities at Nozomi Securities in
Tokyo.
Japan's Nikkei average <> jumped 2.7 percent after
having slid this week near a 26-year low struck last October.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 1.1 percent after hitting a three-month
low earlier in the week. In Hong Kong, shares of HSBC <0005.HK>
helped drive the Hang Seng <> up 1.4 percent.
The gains lagged a 4 percent jump in the U.S. S&P 500
<.SPX> on a surge in financial shares.
Investors showed little reaction to U.S. President Barack
Obama saying he has identified $2 trillion in costs that can be
cut over the next decade as he seeks to offset big fiscal
spending aimed at reviving the economy. []
CHARTS LEND A HAND
Analysts said there were also technical reasons for the
gains in stocks and the yen's slide.
The S&P 500 <.SPX> has held above its intraday lows touched
last November that suggested the near-term downside may be
limited, while the yen's fall took it through chart levels that
spurred further selling.
The dollar climbed along with most major currencies against
the beleaguered yen. The dollar struck a three-month peak of
97.35 before settling back to 97.00 yen <JPY=>, up 0.4 percent
on the day.
On Tuesday the dollar broke through a series of chart
resistance levels -- including the low of 95.70 struck in March
last year and the 38.2 percent retracement of its slide between
August and January.
The yen's fall even as stocks have slid has broken down one
of the key correlations driving markets over the past year or
so -- falling stocks spurring a drop in higher-yielding
currencies against the yen as carry trades are unwound.
Traders have said the change suggests that many such carry
trades -- using the low-yielding yen to buy higher-yielding
currencies or assets -- have largely been unwound.
Gold dropped $6.15 an ounce at $956.30 <XAU=>, falling
further away from 11-month highs above $1,000 hit last week as
some safe-haven buying ebbed and investors booked profits.
Crude oil dipped 36 cents to $39.60 a barrel <CLc1> after
climbing 4 percent the previous day along with the rebound in
equity markets.
In government bonds, the benchmark 10-year Japanese yield
rose 3.5 basis points to 1.300 percent <JP10YTN=JBTC>, the
upper end of its tight range around 1.25 percent and 1.30
percent over the past two weeks.
U.S. Treasuries also lost ground, with the 10-year yield
<US10YT=RR> rising about 2 basis points to 2.819 percent.
(Additional reporting by Aiko Hayashi in Tokyo)
(Editing by Kazunori Takada
