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* Australia dollar jumps to 10-mth high ahead of RBA
* Asia ex-Japan stock valuations approach bull market highs
* Government bonds under pressure as risk appetite persists
By Kevin Plumberg
HONG KONG, Aug 4 (Reuters) - Asian stocks climbed to an
11-month high on Tuesday on hopes a V-shaped recovery may be
forming in the United States, while the Australian dollar hit
its highest since late September after solid housing and retail
sales data.
The batch of economic reports increased speculation the
Reserve Bank of Australia at a policy meeting later in the day
will indicate a shift away from its its rate cutting bias, and
express more optimism on the economy, weighing on government
bonds.
Corporate results also inspired optimism. Shares of HSBC
<0005.HK>, Europe's largest lender, climbed 8 percent after
first half profits were cut in half compared with a year ago
but still beat analysts' forecasts, spurring a wave of
brokerage upgrades.
"A further improvement in economic indicators around the
world and stronger-than-expected corporate earnings are giving
a further boost to global stock markets, including Japan," said
Yumi Nishimura, deputy general manager at Daiwa Securities SMBC
in Tokyo.
Japan's Nikkei share average rose 1.1 percent to a 10-month
high, driven by technology-related stocks. Toyota Motor Corp
<7203.T>, whose shares gained 0.5 percent, will report
quarterly results later in the day.
The MSCI index of Asia Pacific stocks outside Japan also
climbed 1.1 percent <.MIAPJ0000PUS>, with the materials sector
outperforming by a wide margin, up 2.9 percent.
Since March 9, when a global equity market rally began, the
index has risen 77 percent, leading the world. Valuations have
been ticking higher, but so far investors have been comfortable
paying what they view as a growth premium.
On a 12-month forward basis, the Asia Pacific index is
trading at around 14.8 times earnings, below the last bull
market peak of 16 times.
Hong Kong's Hang Seng index <> advanced 1.7 percent to
the highest since late August, led by HSBC.
Asia's economies, especially in China and South Korea, were
among the first in the world to show results of stimulus
spending. However, the U.S. economy has also indicated growing
momentum, emboldening investors to shift more money out of cash
and into higher-yielding assets.
U.S. auto sales in July were a 2009 high, thanks largely to
a "Cash for Clunkers" government programme that offered a
handout to trade in older, less fuel-efficient cars. In
addition, a U.S. manufacturing gauge showed much less
contraction in the sector than expected in July.
The Australian dollar was an early winner in the foreign
exchange market.
The currency rose to a high around $0.8470 <AUD=> after
sequential growth in second quarter Australian retail sales and
housing prices much exceeded forecast.
"We will be significantly revising up our consumption
number, and likely won't be alone," Robert Rennie, chief
currency strategist with Westpac in Sydney, said in the Reuters
Markets Buzz chatroom shortly after the data was released.
The ICE Futures U.S. dollar index <.DXY>, a measure of the
currency's value against a basket of six major currencies,
dipped 0.1 percent to a 10-month low after piercing through
major chart support overnight.
Government bonds were under pressure from persistently
strong equity markets and growing appetite for risk.
The three-year Australian treasury bond future <YTTc1>
dipped 0.2 point to the lowest since early October, while the
10-year Japanese government bond future sagged 0.25 point
<2JGBv1> to the lowest in more than a month.
U.S. Treasuries were largely unchanged in both the cash and
futures market.
Oil prices edged back on some profit taking after a
three-day rally helped crude clear $70 a barrel. U.S. light
crude for September delivery was down 0.3 percent to $71.34
<CLc1>, and Brent was off 0.1 percent to $73.45 <LCOc1>.
(Additional reporting by Aiko Hayashi in TOKYO; Editing by
Tomasz Janowski)
