* Central banks' liquidity move helps supports stocks
* Investors cautious of longer-term growth and inflation
* JGBs trade thin ahead of U.S. jobs data, Fed
By Tom Miles
HONG KONG, July 31 (Reuters) - Most Asian stock markets
rose on Thursday after a move by central banks to boost
liquidity in stormy financial markets balanced out a $4 rebound
in oil prices and the constant fear of slowing growth and
rising inflation.
The U.S., European, and Swiss central banks extended
emergency lending facilities on Wednesday for investment banks
and expanded other liquidity programs to ease credit market
strains that have weighed on the global economy for a year.
The joint measures helped lift share prices in the United
States and Europe, and were a factor in pushing up U.S. bond
yields and the U.S. dollar.
But Asian investors were cautious, weighing up the welcome
central bank support against continued uncertainty about growth
and the worry that loose monetary policy could fuel inflation
further out.
"In the short term, markets could continue to see a bit of
a rally but I still think that we probably haven't seen the low
in equity markets," said Simon Doyle, head of fixed income and
multi-asset at Schroder Investment Management in Australia.
"We're still working through the extent of the economic
downturn. There is a protracted period of weakness to come and
that's going to keep a very cautious tone in markets."
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> was up 0.54 percent by midmorning, but Japan's
Nikkei average <> slipped 0.6 percent, reversing a buoyant
start and undoing most of Wednesday's gains.
Tokyo's mood soured somewhat after video game maker
Nintendo Co Ltd <7974.OS> kept its annual outlook well short of
market expectations, sending its shares down 8.7 percent.
[]
The dollar held near one-month highs against the euro
<EUR=> but slipped back below 108 yen <JPY=>, after getting a
boost the previous day as a report showing unexpected
employment gains provided more hope the U.S. economy is not
deteriorating further.
The dollar's gains were kept in check as oil prices snapped
a losing streak, which has bolstered the U.S. currency on hopes
that a 10 percent slide in crude prices this month would take
some of the pressure off the struggling economy.
U.S. crude <CLc1> rose more than $4 a barrel on Wednesday
after U.S. government data showed an unexpected drop in
gasoline stocks as suppliers facing weak consumer demand cut
production and imports. The price hit $120.42 on Tuesday, the
lowest level since May 6, and was trading around $126.60 in
early Asian trade on Thursday.
Many investors stuck to the sidelines before a slew of
economic data over the next few days, including the monthly
U.S. payrolls report on Friday, that will test expectations the
Federal Reserve may raise interest rates later in the year.
Wednesday's ADP employment report, a private sector gauge
of U.S. labour market trends, showed a surprising 9,000
increase in jobs in July, much better than the expected 60,000
drop.
But analysts warned the figures do not have the best track
record in predicting how the government jobs report would read.
"The danger is that the market has now priced in a strong
August labour market report, suggesting the dollar is likely to
consolidate recent gains," said currency strategists at BNP
Paribas in a note to clients.
Wary of Friday's U.S. jobs data and a Federal Reserve
policy meeting next Tuesday, many investors were keeping their
powder dry. Trade in Japanese Government Bonds was thin,
although data pointing to a slowdown in the Japanese economy
helped push benchmark 10-year yields to a three-month low.
The 10-year yield fell by as much as 1 basis point to 1.515
percent <JP10YTN=JBTC>, its lowest level since late April. It
later pulled back to stand at 1.520 percent.
"Many market players seem to think that the possibility of
a recession is increasing, and it is hard to draw up a scenario
where the Bank of Japan will be raising interest rates," said
Makoto Yamashita, chief JGB strategist for Lehman Brothers in
Tokyo.
(Editing by Kim Coghill)
(Additional reporting by Geraldine Chua in SYDNEY, Eric
Burroughs and Masayuki Kitano in TOKYO)
