* Oil rises to highest since October as commodities climb
* Australia dollar climbs near $0.81
* US Treasury yields tick lower after 10-yr jumps to 4 pct
* Asia ex-Japan resource stocks outperform
(Corrects to show U.S. oil stocks drawdown was larger, not
smaller, than expected)
By Kevin Plumberg
HONG KONG, June 11 (Reuters) - Asian stocks edged higher,
powered by a sharp rise in commodity-related shares as oil
prices extended gains on Thursday, keeping a rising trend in
raw materials prices intact and boosting the Australian dollar.
Major European stock markets were expected to open as much
as 0.3 percent higher, according to financial bookmakers, ahead
of U.S. retail sales data. Wall Street futures were up 0.3
percent <SPc1>, indicating a higher open later.
U.S. Treasuries edged higher, after the benchmark 10-year
yield <US10YT=RR> advanced to 4 percent overnight, the highest
since Oct 16, on concern about how expensive it will be for the
U.S. government to finance its growing budget deficit.
The U.S. dollar fell against the euro ahead of an $11
billion auction of 30-year bonds later, though some analysts
expected foreign investors to continue to snap up Treasuries
with higher yields, supporting the currency.
Meanwhile, tight inventories were squeezing crude prices,
which rose to the highest since October last year.
"Oil prices continue their march to, and then beyond, $75
per barrel. Our forecast of an average $85 a per barrel for
2010 appears well on track, and we believe further upside price
risk exists incoming quarters," Barclays Capital analysts said
in a research note.
U.S. light crude for July delivery <CLc1> was up 1.1
percent to $72.15 following U.S. data showing a larger than
expected drawdown of inventories. []
Commodity prices have been broadly supported by signs of
sustained domestic demand in China. Despite a slightly larger
than expected annual decline in Chinese exports in May, urban
fixed asset investment rose 32.9 percent last month compared
with a year ago. []
Japan's Nikkei share average <> briefly poked above
the psychologically key 10,000 to an eight-month high but
closed down 0.1 percent on worries that rising interest rates
in U.S. bond markets could thwart an economic recovery.
Still, shares of Nippon Steel Corp <5401.T> and other steel
companies jumped and held on to gains after Morgan Stanley
upgraded its ratings of the sector.
The benchmark S&P/ASX 200 index <> in resource-rich
Australia edged up 0.6 percent, buoyed by a 19 percent surge in
shares of Fortescue Metals <FMG.AX> on market rumours of
Chinese interest in resource companies.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.5 percent, but the materials sector
index <.MIAPJMT00PUS> was up 2.1 percent.
The sub-index has risen 79 percent in the last three
months, and the 90-day correlation with the Australian dollar
has tightened to 0.98.
U.S. DOLLAR DOWN BUT NOT OUT?
The Australian dollar was up around 1.1 percent at $0.8102
<AUD=>, boosted after a report showed national employment fell
much less than expected in May. The data was interpreted by the
market to mean the Reserve Bank of Australia has fewer reasons
to lower interest rates further to support the economy.
[]
The New Zealand dollar <NZD=> rallied more than 1.2 percent
to $0.6365 after the central bank kept its interest rate steady
at a record low 2.5 percent and pledged to keep it there
through next year, a move seen ending its aggressive easing
cycle to combat recession as the economy shows tentative signs
of bottoming out. []
The euro rose about 0.5 percent to $1.4040 <EUR=>, but
trends were unclear, with the market's focus torn between
higher U.S. yields, pronouncements from reserve managers on
their Treasury holdings and the trajectory of interest rates in
the euro zone.
Some analysts were positive about the dollar's outlook,
because of sustained interest by foreign official investors as
well as private investors looking for higher yields.
"The dollar gained following the steepening of the U.S.
yield curve, which is certainly good news as it suggests the
dollar can do well in an environment of rising yields,
particularly should sovereign concerns abate," said Brian Kim,
currency strategist with UBS, in a note to clients.
The benchmark 10-year U.S. Treasury yield slipped to 3.93
percent <US10YT=RR> after rising as high as 4 percent on
Wednesday. This week Treasuries have been under pressure
because of $65 billion in new supply coming to the market.
Higher Treasury yields have a domino effect on the economy,
since key rates for loans like mortgages are benchmarked to
them. In the last three weeks, the 30-year U.S. mortgage rate
has risen 88 basis points, according to the Mortgage Bankers
Association, at a precarious time when the housing market is
slowly stabilising.
Japanese government bonds also sold off, pushing up the
10-year yield to the highest since late October, at 1.56
percent <JP10YTN=JBTC>.
(Additional reporting by Maryelle Demongeot in SINGAPORE;
Editing by Lincoln Feast)
