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* Dollar hovers near 16-week highs against yen
* Asian stocks edge up, poised for near 70 pct annual gain
* Oil up for a 7th day, trading just shy of $80
By Susan Fenton
HONG KONG, Dec 31 (Reuters) - The dollar hovered near 16-week
highs against the yen on Thursday while encouraging U.S. economic
data helped lifted Asian stocks, which are poised to post a near
70 percent rally for the year.
The dollar was trading at 92.39 yen <JPY=>, after hitting a
16-week high at around 92.77 in New York trade, as the yen
continued to face pressure as a yield play and amid concern about
the health of Japan's finances.
The U.S. currency has rallied 7 percent against the Japanese
currency this month but looks set to end a volatile year with a
modest loss for 2009 against a basket of major currencies <.DXY>.
Asian share markets in contrast are poised to notch up a near
70 percent annual gain, reflecting renewed risk appetite as an
upturn in Asian economies has helped the global economy pick up
from its worst downturn in decades.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS>, was up 0.6 percent but share markets in Japan
and South Korea were closed for public holidays and trade across
markets was very thin with many participants on holiday.
The MSCI Asia Pacific equity index has rallied 67 percent
this year and Sebastien Barbe, Asia economist at Calyon in Hong
Kong, sees continued but more modest gains for Asian equities in
2010.
"The rally in Asian equities will continue because there is
still a lot of cash in the global economy. Asia is perceived as
the place where economic growth will be strong in the next five
year and it does not have the problem of government or household
debt that the West has," said Barbe.
However, uncertainty over when the U.S. will start to raise
interest rates will weigh on global equity markets, including
Asia. Calyon does not expect the Federal Reserve to increase
rates until 2011, arguing that while U.S. economic data is
improving it is still weak.
"If we are wrong, and markets price in an earlier than
expected U.S. rate increase, that will have an impact on equity
markets, including in Asia," said Barbe.
OIL WITHIN SIGHT OF $80
Resources stocks enjoyed gains as the oil price rose for a
seventh straight day, trading just shy of $80 a barrel following
a drawdown in U.S. oil stocks and unseasonally cold weather
across the northeastern United States.
Oil is now poised to mark its strongest year in a decade,
having rallied nearly 80 percent since the start of 2009.
Equity investors in Asia were encouraged by a Chicago
business barometer which hit a four-year high and helped the Dow
Jones <> to a slight gain on Wednesday, setting the U.S. blue
chip index up for its first annual gain in two years.
Signs of a sustained recovery in the world's biggest economy
have dented gold's appeal as a hedge against further weakening of
the dollar although spot gold <XAU=> steadied on Thursday, edging
up to $1,096.70 an ounce from $1,092.55 at the New York close.
The near-term outlook for the metal is uncertain as traders
are unsure whether the dollar's recent gains are due to year-end
position squaring or whether they are the start of a longer
upturn.
As the year drew to a close, Australia's stock market posted
its biggest annual gain in 16 years with a sterling 31 percent
rise from a year ago, reflecting rising global demand for
commodities and Australia's lead in recovering from the global
economic downturn and financial crisis.
"There's definitely been a sense -- and there has been for
the last several months -- that in Australia we weathered this so
much better than anyone else," said Cameron Peacock, an analyst
at IG Markets in Melbourne.
The Australian dollar <AUD=> has been the best performing
major currency and was on track for a resounding 27 percent gain
against the U.S. dollar this year.
The Aussie edged up to $0.8967, from $0.8904 late on
Wednesday.
Against a trade-weighted basket of currencies, it is up 25
percent this year, helped by its relatively high yield which has
attracted investors as risk appetite improved.
With Australia expected to raise interest rates again soon
and demand for commodities seen continuing to rise next year,
traders say the Aussie is poised for further gains early in 2010.
(Additional reporting by Morag MacKinnon in SYDNEY; editing by
xxxxxxxxxxx)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
