* Asia stocks rise, Japan gains 0.6 percent
* Dollar edges up vs yen, falls vs euro ahead of Fed
* Oil above $42 a barrel after 9 pct drop on Tuesday
* Treasuries prices climb on hopes of Fed bond move
(Updates market prices, European opening expectations)
By Charlotte Cooper
TOKYO, Jan 28 (Reuters) - Asian shares rose on Wednesday,
helped by gains on Wall Street and a jump in banking and
technology stocks, with Japan reversing losses as Tokyo
Electron <8035.T> and other hi-tech stocks climbed.
In Europe, bookmakers expected leading European indexes to
rally, with London's FTSE <> expected to open up as much
as 0.8 percent and Frankfurt's DAX <> to gain 1.2
percent.
The dollar edged up 0.2 percent to 89.13 yen <JPY=> as
gains in stock markets prompted investors to offload the
safe-haven Japanese currency, but the greenback fell versus the
euro as players awaited the outcome of a Federal Reserve
meeting.
The U.S. central bank has already cut interest rates to
nearly zero and is searching for other tools to pull the
world's largest economy out of a deepening year-long recession.
The Fed could unveil fresh steps to ease the global credit
crunch when it concludes the two-day meeting later in the day.
IN particular, traders will be scouring its statement for clues
on whether it will buy U.S. government bonds, which could help
check longer=term borrowing rates. []
U.S. Treasuries rose, buoyed by hopes the Fed would move a
step closer to buying long-dated bonds. []
Benchmark 10-year U.S. Treasuries climbed 9/32 in price to
yield 2.555 percent <US10YT=RR>, down around 3 basis points
from Tuesday. The 30-year bond rose 24/32 in price to yield
3.259 percent <US30YT=RR>, down 3.5 basis points.
Worries about oversupply due to huge bond issuance by
governments to fund economic stimulus packages have dented
investor sentiment somewhat, but economic concerns on the back
of global financial turmoil have underpinned demand for
Treasuries.
"If the Fed makes comments on purchasing Treasuries, it
would soothe concerns that overseas investors may start picking
up fewer U.S. bonds," said Hideki Hayashi, chief economist at
Shinko Securities.
STOCKS MOVE UP
Traders said U.S. stock futures <DJc1><SPc1> rose after a
key U.S. Senate panel expanded a stimulus package aimed at
jump-starting the economy to about $887 billion on Tuesday from
its original $825 billion price tag.
That also helped push Japan's Nikkei average <> to
close up 0.6 percent, although market players remained
cautious.
"The U.S. government is expected to come up with a series
of economic steps from now on and that could lead to a
financial deficit and the dollar will likely be sold, with the
yen as a likely safety bid," said Hiroaki Kuramochi, chief
equity marketing officer at Tokai Tokyo Securities.
Banks rose after encouraging earnings news from American
Express <AXP.N>, though Nomura Holdings <8604.T>, Japan's
largest brokerage, fell 2 percent after posting a record $3.8
billion yen quarterly loss due in part to the cost of
integrating Lehman Brothers' operations. []
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> climbed 2 percent following gains on Wall
Street, which rallied for the third day in a row on Tuesday on
hopes that government efforts to stabilise the U.S. economy
will take hold.
The Dow Jones industrial average <> rose 0.72 percent
while the Standard & Poor's 500 Index <.SPX> gained 1.09
percent and the Nasdaq Composite Index <> rose 1.04
percent, shrugging off a fall in consumer confidence to a
record low. []
Many investors remain wary of commiting their cash after
heavy losses last year and a flurry of bleak economic news and
profit warnings from companies around the world.
Canon Inc <7751.T> shares closed 0.4 percent up ahead of
news its quarterly operating profit fell 81 percent as a
deepening recession hit demand for cameras and office equipment
[].
Shares in Seoul climbed after Lunar New Year holidays, led
by chip makers after German rival Qimonda <QMNDQ.PK> filed for
insolvency.
The Korea Composite Stock Price Index <> rose 6
percent, helped by Samsung Elec <005930.KS> and Hynix
<000660.KS>, which rose nearly 15 percent on expectations that
Qimonda's move would help drain a glut of chips on the market.
Australian shares gained 1.5 percent, shored up by the
banks, while top property stock Westfield Group <WDC.AX> and
building materials group Boral Ltd <BLD.AX> slid on profit
warnings.
The euro climbed against the yen while sterling, which hit
a record low versus the Japanese currency last week, gained 1
percent to 127.11 yen <GBPJPY=R>.
The euro was up 0.7 percent at $1.3257 <EUR=>, while gold
<XAU=> traded at $893 an ounce, down from $895.90 on Tuesday.
U.S. crude oil futures regained some ground after dropping
9 percent on Tuesday. NYMEX crude for March delivery <CLc1> was
trading up 59 cents at $42.17 a barrel.
(Editing by Kim Coghill)
