* Gold hits record high for a second straight day
* Asian stocks advance on rising risk appetite
* Economic recovery expectations spur commodities
* Yen heads back up as latest BOJ steps disappoint
(Repeats to more subscribers)
By Susan Fenton
HONG KONG, Dec 2 (Reuters) - Gold surged to an all-time
high above $1,200 an ounce on Wednesday, hitting a record for a
second straight day, and Asian stocks advanced as investors
chased riskier assets offering higher returns.
Spot gold <XAU=> rose 1 percent to $1,208.70 amid a broad
rally in commodities on expectations of rising global demand,
fueled by upbeat U.S. home sales and analysts' forecasts that
China's economy could grow by 10 percent or more this quarter.
Copper <MCU3> touched its highest level in 15 months.
Gold was also supported by weakness in the U.S. dollar,
which was again on the defensive while the euro and
high-yielding currencies extended gains as investor risk
appetite showed little sign of waning as it usually does
heading into the year end.
The dollar was flat against a basket of major currencies
<.DXY>, while the yen <JPY=> came off earlier lows amid
disappointment that emergency steps announced the Bank of Japan
on Tuesday, primarily short-term funding for banks, did not go
further to tackle deflation or help alleviate upward pressure
on the yen.
The yen was trading at 86.91 to the dollar, up from
Tuesday's low of 87.54. It has gained more than 4 percent this
year, raising worries that exports are growing less
competitive, threatening to tip Japan back into recession.
Some analysts had expected the BOJ to signal a return to a
narrow form of quantative easing seen in 2001-06, when it
slashed interest rates to zero and flooded markets with cash in
a bid to spur growth.
"The BOJ squandered any possible 'announcement effect' that
would have bolstered the attempts to weaken the yen," said
Glenn Maguire, chief economist at Societe Generale in Hong
Kong. "The entire episode seems to have the notion of 'rushed'
all over it."
SHARES ADVANCE, OIL RETREATS
Investors pumped money back into equities across most of
Asia as fears eased about potential global contagion from
Dubai's debt repayment problems and after data showed pending
U.S. home sales reached a three-and-a-half year high in
October.
In addition, a survey by the Institute for Supply
Management showed the U.S. manufacturing sector expanded last
month for a fourth month, although by less than expected. The
reports helped push the Dow Jones <> up 1.2 percent to a
14-month closing high. []
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> was 1.3 percent higher while the Thomson
Reuters index of regional shares <.TRXFLDAXPU> was up 0.6
percent.
Japan's Nikkei share index <> bucked the rest of Asia,
dipping 0.2 percent on disappointment over the BOJ actions and
the country's shaky economic outlook.
A Reuters Tankan survey showed Japanese manufacturers'
confidence was at a one-year high but still negative and the
pace of economic recovery is expected to slow. []
Japanese government bond futures also fell after the
central back action fell short of market expectations.
The commodities rally lifted shares in Australia where the
benchmark index <.AXJ0> was up 1 percent as copper miner Kagara
Ltd <KZL.AX> rallied 7 percent and gold miner Newcrest Mining
<NCM.AX> jumped 5 percent.
Shares of Asian car makers also got a lift after data
showed U.S. car sales rose in November, which analysts said was
a further sign that the world's biggest economy is recovering.
Shares of South Korea's Hyundai Motor Co <005380.KS>
climbed 1 percent after its U.S. sales rose 46 percent last
month, putting it on course to boost its U.S. market share by a
third this year.
Japan's Nissan Motor <7201.T> reported a 31 percent jump in
U.S. sales last month, boosting its share price by 2 percent.
Oil prices <CLc1> eased 0.4 percent to around $78 a barrel
after American Petroleum Institute data showed U.S. crude
stocks rose much more than expected last week.
"Inventories are still high while demand is relatively
subdued, but the downside is limited ... when prices decline it
attracts new buying supported by the view on macro economic
recovery," said David Moore, commodities strategist at
Commonwealth Bank in Sydney.
(Additional reporting by Nick Trevethan in SINGAPORE and
Anirban Nag in SYDNEY; Editing by Kim Coghill)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
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