* Lower oil eases cost burdens
* More earnings eyed after banks
* Strong U.S. dollar "really very important" - Paulson
(Repeats to additional subscribers with no change to text)
(Updates prices, adds Hong Kong stock market, comments)
By Kevin Plumberg
HONG KONG, July 23 (Reuters) - Oil prices on Wednesday slid
$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.
The dollar held gains made the previous session after top
U.S. officials, including Treasury Secretary Henry Paulson,
gave it a verbal lift.
Crude was down 0.5 percent to $127.82 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 in Japan. "It's still far too early to
let down our guard."
Japan's Nikkei share average <> rose 1.5 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 2.3 percent to the highest in three
weeks, according to an MSCI index.
Hong Kong's Hang Seng <> rose 2.2 percent to a
one-month high.
Despite investors' increasing willingness to buy riskier
assets lately, high inflation continues to stalk Asian markets.
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.
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. []
Consumer prices in Vietnam, whose stock market is one of
the worst performers this year, are expected to rise 25 percent
this year, double last year's pace, with the country seen
running an $18.8 billion trade shortfall, a state-run newspaper
said.
VALUATIONS PROVIDE SUPPORT
JPMorgan slashed its 2008 targets for Asia-Pacific stock
markets across the board on Wednesday by an average of 13.5
percent, though still was looking for double-digit 12-month
returns from every country in the region, excluding Japan.
Cheap valuations will likely support equity prices over the
next year, with top three most inexpensive markets tracked by
JPMorgan's valuation model -- Taiwan, Phillipines, Australia --
located in Asia.
"The consensus return-on-equity forecasts for the next
three years are much higher than the historic average for each
market," said Adrian Mowat, JPMorgan's chief equity strategist
for emerging markets and Asia Pacific. "While this indicates a
high degree of optimism it can also be argued that this
suggests that the risks to valuations are on the upside," he
said in a note.
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 2 basis points to 1.63 percent.
The U.S. dollar stayed firm, holding much of the ground
gained against the euro and yen the previous day 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 edged down 0.1 percent at 107.20 yen <JPY=>. The
euro was little changed at $1.5795 <EUR=> and flat against the
yen at 169.33 <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 Lincoln Feast)
