* Lower oil eases cost burdens
* More earnings eyed after banks
* Strong U.S. dollar "really very important" - Paulson
By Kevin Plumberg
HONG KONG, July 23 (Reuters) - Oil prices on Wednesday
slipped $20 below an all-time high hit two weeks ago, helping
to lift Asian stocks and weigh on government bonds as investors
cautiously reached for higher returns as well as more risk.
Crude was trading around $128.38 a barrel <CLc1> after
having closed on Tuesday at its lowest since June 5 partly on
fears about waning U.S. demand. That has in turn eased
immediate concerns about the burden of high energy costs,
though soft consumer demand continues to be a worry.
On the earnings front, with the results from some Wall
Street banks not as dire as analysts had predicted, investors
broadened their focus to other sectors, with announcements on
Friday expected from Samsung Electronics Co Ltd <005930.KS> and
Honda Motor Co <7267.T>.
"We're just seeing a temporary bright patch," said Yoku
Ihara, manager of the investment information department at
Retela Crea Securities. "It's still far too early to let down
our guard."
Japan's Nikkei share average <> rose 1.3 percent to
the highest in two weeks. If the index keeps its gains on the
day, it will be the first time since April that the Nikkei has
had back-to-back gains of at least 1 percent.
Outside of Japan, shares in the Asia-Pacific region
<.MIAPJ0000PUS> climbed 1 percent to the highest in three
weeks.
South Korea's KOSPI was up 1.6 percent, led by gains in the
world's fourth-largest steel maker POSCO <005490.KS>.
Despite investors' increasing willingness to buy riskier
assets lately, high inflation continues to dangle a sword over
Asia.
The combination of rising price pressures and slowing
growth was a big factor in the nearly $4 trillion in market
capitalisation that has evaporated since November, Morgan
Stanley said.
NOT ONE-WAY RISE FOR DOLLAR
Underlying inflation in Australia was at the highest in
almost 17 years in the second quarter, suggesting the central
bank may have to keep interest rates where they are despite
threats to growth. []
Yields on safe-haven government bond yields, which move
inversely to prices, edged higher as the MSCI all-country world
equities index <.MIWD00000PUS> appeared poised for a sixth
straight day of gains, the longest string since May.
The benchmark 10-year U.S. Treasury yield <US10YT=RR>
ticked up to 4.11 percent, up a basis point from late Tuesday
in New York and 8 basis points higher on the year.
The 10-year Japanese government bond yield <JP10YTN=JBTC>
rose 3 basis points to 1.64 percent.
The U.S. dollar stayed firm, holding much of the ground
gained against the euro and yen the previous day after Treasury
Secretary Henry Paulson said a strong dollar was "really very
important," a variation on his usual comments about the
currency.
"The dollar broke through some key levels and has upside
momentum," said Motonari Ogawa, director of forex trading at
Barclays Bank in Tokyo. "But Japanese exporter selling could
emerge at these levels, and it won't be a one-way rise for the
dollar," said Ogawa.
The dollar was up 0.1 percent at 107.32 yen <JPY=>. The
euro was little changed at $1.57832 <EUR=> and flat against the
yen at 169.38 <EURJPY=R>, not far from a record high 169.91 yen
hit on Monday.
(Additional reporting by Elaine Lies and Shinichi Saoshiro in
Tokyo, Editing by Jacqueline Wong)
