(Repeats to more subscribers)
* Asia stocks edge up as crude falls below $134 a barrel
* U.S. dollar strengthens, helping regional exporters
* Inflation pressures lurk as corn prices rise to record
(Updates prices, adds comments)
By Kevin Plumberg
HONG KONG, June 16 (Reuters) - Asia stocks rallied on
Monday as the U.S. dollar rebounded and oil fell below $134 a
barrel, boosting confidence in the region's exporters, but
bonds fell on expectations central banks will raise rates to
fight inflation.
Oil prices declined by $1 to $133.86 a barrel <CLc1> after
United Nations Secretary General Ban Ki-moon said Saudi Arabia,
the world's largest crude exporter, had told him it will boost
output to the fastest in decades. []
Along with U.S. inflation data that showed underlying price
pressures rose moderately in May, and the biggest weekly rise
in the U.S. dollar in three years, the easing in crude prices
improved the prospects of some of Asia's well-known exporters
such as Canon Inc <7751.T> in Japan and Samsung Electronics
<005930.KS> in South Korea.
"A softer yen sparked hopes for upward earnings revisions
for some exporters," said Takahiko Murai, general manager of
equities at Nozomi Securities in Tokyo.
"But we have to brace for an eventual dramatic slowdown in
Japan, where the stock market and the economy depend on
overseas demand, considering the recent declines in Asian
shares and rising inflation worries in emerging countries."
Japan's Nikkei share average <> climbed 2.5 percent
with the yen falling to a four-month low against the dollar.
South Korea's KOSPI <> rose 1 percent and Taiwan's
TAIEX <> jumped 1.2 percent, led by the technology sector.
The MSCI index of Asian equities <.MIAS00000PUS> rose 1.7
percent, after last week posting its largest decline since the
week of Aug. 19. Stocks in the Asia-Pacific region outside of
Japan were up 1.2 percent on the day <.MIWD00000PUS>, the
biggest gain in a month.
Equity markets in emerging Asia are viewed as particularly
vulnerable to high oil prices because many of the region's
central banks have had pro-growth policies for so long and
their exchange rate policies are tightly woven to the U.S.
dollar.
Last week Asia ex-Japan equity funds suffered the biggest
redemptions of any major fund group and saw money going out the
door for the eighth week in the last nine, according to EPFR
Global, a Boston-based research firm that tracks $11 trillion
in assets.
"Inflation was again the key driver of sentiment towards
Asia, with investors fretting about the combination of social
unrest, higher interest rates and weaker public finances
triggered by the rapid escalation of food and energy prices,"
said EPFR Global analysts in a note to clients.
Government bonds around the world continue to be sold off
on the view central banks are more concerned about the
inflationary effects of high oil prices than sluggish economic
growth.
The benchmark yield on the 10-year Japanese government
bond, which moves inversely to the price, rose to the highest
since July 2007, up 3 basis points to 1.895 percent
<JP10YTN=JBTC>.
U.S. Treasuries were relatively steady in Asian trade. The
two-year U.S. yield <US2YT=RR> last week had its biggest rise
in 26 years as investors scrambled to price in bets the Federal
Reserve could raise its benchmark interest rate this year.
Seventeen of the 31 central banks around the world tracked
by Reuters have raised their interest rates already this year,
including China, India, Indonesia and the Philippines.
[]
The dollar was up 0.2 percent against the yen at 108.28 yen
<JPY=>, strengthening by about 3 yen so far in June. The euro
slipped 0.1 percent to $1.5390 <EUR=>.
U.S. corn futures <Cc1> rose more than 3 percent to a fresh
record high as flooding in the U.S. Midwest raised the chances
of reduced output from the world's largest corn exporter.
(Additional reporting by Aiko Hayashi in TOKYO; Editing by
Louise Heavens)
