Asia stocks, bond yields jump on solid US data

HONG KONG: Asian stocks jumped on Thursday, with Japanese shares set
for the biggest daily gain in a month, on the back of a monthly gauge
of US business spending that was the highest this year, boosting safe-
haven government bond yields.

Exporters and technology companies provided the biggest lift to
Japan's Nikkei share average, which rose 2.9 percent, despite oil
prices that remain above $130 a barrel. And inflation fears still lurk
just below the surface.

The benchmark 10-year Japanese government bond yield rose to the
highest since August. On Wednesday, the benchmark 10-year U.S.
Treasury yield rose above 4 percent, the highest since early January,
as investors demanded more of an incentive with high energy costs
feeding price pressures. The strength in equity markets and weakness
in bonds were essentially a reversal of Wednesday's pullback in
investors' willingness to take risks.

"Yesterday's selling in stock futures and buying in bond futures was
rather too extreme. Those moves seem to have calmed down today," said
Takahiko Murai, general manager of equities at Nozomi Securities. By
0130 GMT, South Korea's KOSPI rose 1.7 percent, set for its biggest
single-day rise in two weeks. Consumer goods heavyweight Samsung
Electronics led the index higher after Nomura upgraded its rating on
the company to "buy."

Taiwan's tech-heavy TAIEX index rose 1.4 percent, and Hong Kong's Hang
Seng was up 1.1 percent. An MSCI index of Asia-Pacific stocks outside
Japan gained 1.3 percent to its highest level since Monday. Some
analysts cautioned that the optimism evident in markets may not last.

"Trading volume is relatively light as investors are still unsure
about oil price trends, and as more US economic data is due later this
week," said Lee Sun-yeob, market analyst at Goodmorning Shinhan
Securities. The benchmark 10-year Japanese government bond yield
jumped 6 basis points to 1.795 percent, the highest in nearly 10
months.

The July contract for U.S. light crude oil was off 80 cents at $130.22
a barrel However, oil's 34 percent climb so far this year has raised
fears about tighter consumer spending and business investment in the
world's largest economy, particularly with the U.S. dollar showing no
signs of consistent strength. The U.S. currency held steady against
the yen at around 104.84 and was flat against the euro at 1.5650.