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 cautious.
The U.S. dollar slipped back toward one-month lows against
major currencies such as the euro, putting upward pressure on
the cost of crude, which has already risen about 20 percent in
May to record highs above $130 a 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 <> 1.5 percent higher, a day after they led
the index down to its biggest one-day drop in six weeks.
The MSCI <.MIAPJ0000PUS> index of Asian stocks outside of
Japan recovered by 0.7 percent as of 0625 GMT.
Hong Kong's Hang Seng index rose 0.6 percent. Shares of
China's third-biggest oil company CNOOC Ltd <0883.HK> were the
biggest boost to the index rising 2.4 percent.
South Korea's KOSPI <> was up 1.4 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 2 basis points to 1.760 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 spells 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.
"Market sentiment remains weak, with investors jittery
about rising inflation," said Koji Ochiai, senior market
analyst at Mizuho Securities.
The euro edged up 0.2 percent to $1.5810 <EUR=> against the
dollar, after climbing as high as 1.5819, the highest since
late April. The U.S. currency steadied against the yen at
103.45 <JPY=>.
In emerging markets, dealers said that central banks in
Indonesia, the Philippines, South Korea and Taiwan were
suspected of selling U.S. dollars to protect their currencies
from market volatility and the economic pain inflicted by high
energy prices.
U.S. light crude <CLc1> rose 95 cents to $133.15 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.
