* Stocks rebound as Obama moderates tone on US bank laws
* Tech shares also help lead Asia higher on upgrades
* Euro drops below $1.3940 then recovers to $1.4000
* U.S. bond yields creep higher as stocks climb
* Toyota tumbles 4 pct as it halts most U.S.-Canada sales
(Recasts, adds background, quotes)
By Kevin Plumberg
HONG KONG, Jan 28 (Reuters) - Asian equities rose on
Thursday, snapping a nine-day decline, led by upbeat earnings
expectations and a relief rally in U.S. stock futures after
U.S. President Obama moderated his tone on bank restrictions.
In another positive development for risk taking, technology
shares, which had been leading the broader Asian market lower
in recent sessions, reversed course and were up 2.2 percent
across the region, supported by robust profit outlooks.
The U.S. dollar had a roller-coaster session, briefly
rising to a six-month high against the euro <EUR=> and then
slashing gains to trade flat on the day against major
currencies <.DXY>. "There seems to be relief in the market
that he (Obama) has not made strong remarks about the bank
regulation plan. But we need to continue to watch how that pans
out," said Ayako Sera, market strategist for Sumitomo Trust and
Banking in Tokyo.
Obama's announcement last week that he planned tough new
regulations which could break up big banks had prompted heavy
selling of financial shares as investors feared it would slash
their profits.
On Wednesday night, Obama pushed jobs creation to the top
of his agenda in his State of the Union address and said he
would work to dig the country out out a "massive fiscal hole".
He still pledged to slap tough new regulation on Wall
Street but said he was "not interested in punishing banks",
which helped boost U.S. stock futures and Asian shares by
appearing to retreat slightly from some of his recent fiery
rhetoric. []
U.S. stock futures <SPc1> were up 0.7 percent in
after-hours trade after Obama's speech, adding to modest gains
on Wall Street overnight after the U.S. Federal Reserve pledged
to keep interest rates near zero and offered a more guardedly
optimistic view of the U.S. economy than it had previously.
[]
"If you go back to what he (Obama) said last week it was
incredible how adversarial he was from a standpoint of the
financial system -- banks and fat-cats on Wall Street versus
poor little Americans. It seems from what I've heard he has
toned down the rhetoric," said Alan Lancz, president of fund
manager Alan B. Lancz & Associates in Toledo, Ohio.
Japan's Nikkei share average <> finished 1.6 percent
higher, helped by reports of robust earnings growth from Honda
Motor Co <7267.T>, whose stock jumped 3.3 percent.
But Honda's key competitor Toyota Motor Co <7203.T> saw its
shares slump 4 percent after it suspended U.S. sales of some of
its best-selling vehicles because of safety issues. Toyota
shares have lost 13 percent of their value over the past week
as the automaker announced a series of recalls that have
tarnished its reputation and emboldened its rivals.
[]
The MSCI index of Asia Pacific stocks outside Japan was up
1.6 percent <.MIAPJ0000PUS> though was still down 4.5 percent
so far in January.
The tech sector <.MIAPJIT00PUS> provided the biggest
support to the index, rising 2.2 percent.
Technology has seen the biggest upgrades in earnings
estimates of any other segment over the last 30 days, up 4.6
percent, while valuations have actually contracted in the
period amid a global equity retreat.
See this link for more details on tech upgrades:
http://www.trpropresearch.com/docs/EarningsAggregatesAsia/TRPR_
14300_12.pdf/
CURRENCIES
The rebound in equity markets contributed to more
confidence about taking risks in currency markets, benefiting
emerging market currencies as well as the Australian dollar.
The Australian currency was up 0.7 percent at US$0.9010
<AUD=>.
The euro fell to a low below $1.3940 <EUR=> before cutting
losses on the day to $1.4012. In the last two weeks, fears over
Greece's deteriorating fiscal health have been a dead weight on
the euro, contributing to a 5 cent decline.
The rise in stock futures also dragged up U.S. Treasury
yields further.
Shorter-maturity yields shot higher on Wednesday after a
Federal Reserve policy meeting, in which one hawkish Fed member
surprisingly dissented to a decision to keep a phrase from a
statement saying rates would be kept low for an "extended
period." []
The yield on the 2-year U.S. Treasury note <US2YT=RR> was
at 0.9430 percent, up more than 2 basis points from late
Wednesday in New York trade.
The spread of the benchmark 2-year euro zone government
bond yield <EU2YT=RR> over the 2-year U.S. yield narrowed to 20
basis points, the smallest so far in January, after dropping 6
basis points on Wednesday.
That indicated there is an increasingly small incentive to
hold euros instead of dollars.
The stronger U.S. dollar weighed on raw materials prices.
Copper traded in Shanghai was down 3 percent <SCFc3>, after
three-month copper on the London Metal Exchange dropped around
4.7 percent <MCU3> on Wednesday.
Oil prices <CLc1> rose 0.3 percent to just under $74 a
barrel.
(Additional reporting by Satomi Noguchi in TOKYO)
(Editing by Kim Coghill)
