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By Kevin Plumberg
HONG KONG, May 27 (Reuters) - Asian stocks rebounded on
Tuesday from the previous day's dip, as bargain hunters scoured
the market after five days of losses, though rising inflation
and high oil prices kept investors uncertain about the outlook.
The U.S. dollar slipped back toward one-month lows against
major currencies, putting upward pressure on the cost of crude,
which has already risen about 20 percent in May to record highs
above $130 barrel.
Rising commodity prices have fed inflation around the
world, hitting consumers' pockets and causing investors to
question asset valuations, particularly in the bond market
where the yield on the benchmark 10-year Japanese government
bond rose to a fresh nine-month high on Tuesday.
Companies such as robot maker Fanuc Ltd <6954.T> and
clothing firm Fast Retailing Co Ltd <9983.T> led Japan's Nikkei
share average <> up 0.8 percent, a day after they were
leaders in dragging the index down in its biggest one-day drop
in six weeks.
South Korea's KOSPI <> also climbed 0.8 percent after
six straight days of declines, with technology giant Samsung
Electronics <005930.KS> paving the way higher.
"Stocks rose on a rebound after investors sold them off too
sharply yesterday, though the market lacks direction as
overseas markets were closed," said Masaru Hamasaki, senior
strategist at Toyota Asset Management.
The rally in Asian equities sucked money from government
bonds.
Ahead of a 20-year bond auction later on Tuesday that would
add more supply to the market, the 10-year Japanese government
bond yield <JP10YTN=JBTC> rose 3 basis points to 1.770 percent,
the highest since early August.
The 10-year yield, which moves inversely to the price, has
shot up nearly 20 basis points in May as many large banks cut
positions they built up during the worst parts of the credit
crisis and as oil prices continued to fuel inflation fears.
U.S. Treasury debt, considered by many to be the world's
safest investment, has also been under pressure lately but has
lagged the selloff in Japan.
The benchmark 10-year U.S. Treasury yield <US10YT=RR>
inched up to 3.86 percent, up 1 basis point on the day.
"Market sentiment remains weak, with investors jittery
about rising inflation," said Koji Ochiai, senior market
analyst at Mizuho Securities.
The New York Board of Trade's U.S. dollar index slipped 0.1
percent to 71.91 <.DXY>, near a one-month low of 71.82 touched
last week. The euro edged up 0.1 percent to $1.5795 <EUR=>,
while the dollar inched down 0.1 percent to 103.30 yen <JPY=>.
U.S. light crude <CLc1> rose 84 cents to $133.03 a barrel,
around $2 below an all-time high of $135.09 hit last Thursday,
and spot gold <XAU=> was steady at around $927 an ounce.
