* Asian stocks gain, Japan's Nikkei up 3.5 percent
* Yen extends losses as Japan announces fresh company aid
* Gold holds above $900 an ounce
* Oil prices below $46 a barrel after previous fall
By Charlotte Cooper
TOKYO, Jan 27 (Reuters) - Asian stocks rose on Tuesday,
with Japan's benchmark index jumping more than 3 percent
following a gain in U.S. markets and as exporters rebounded on
a weaker yen.
The yen extended losses against the euro and the dollar
after Japan announced it would offer public funds to firms
whose capital has been hurt by the global financial crisis.
[]
News of the government funding offer came during the stock
market's midday break, but was expected to push the Nikkei
<> higher when trade resumed in the afternoon.
The Nikkei average <> was up 3.5 percent by 0300 GMT,
after marking its lowest close in almost three months the
previous day, as shares of exporters rebounded.
Honda Motor Co <7267.T> surged nearly 6 percent after a
newspaper said Japan's second-biggest carmaker plans to
increase production capacity in China by 23 percent as it
expects solid demand there for its fuel-efficient vehicles.
[]
The news appeared to overshadow a statement by the company
that it was making fresh production cuts in North America and
Japan amid continued falls in demand as recession-hit consumers
pared spending.
"Coupled with gains in U.S. stocks and a halt in the yen's
appreciation, news about Honda's production hike in China is a
positive driver amid extremely pessimistic news about sharp
production cuts and slumping sales these days," said Fujio
Ando, senior managing director at Chibagin Asset Management.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> was up 0.9 percent, after a 0.48 percent gain
in the Dow Jones industrial average <> and a 0.56 percent
rise in the Standard & Poor's 500 index <.SPX> on Monday.
Many Asian markets remain closed for Lunar New Year, but
Australian shares <> rose more than 2 percent after a
one-day holiday, helped by banks and miners such as Rio Tinto
<RIO.AX>, which were buoyed by a rebound in metal prices.
The yen was on the back foot versus the euro and sterling
as investors' mood improved after British bank Barclays
<BARC.L> said it would report a 2008 pretax profit, helping
other financial stocks, and U.S. data showed a surprise rise in
existing home sales.
The dollar rose 0.5 percent to 89.57 yen <JPY=> and the
euro climbed 0.9 percent to 118.50 yen <EURJPY=R> after news of
the Japanese corporate aid plan.
Gold <XAU=> held steady just above $900 an ounce after a
three-day rally on safe-haven buying, and oil prices paused
below $46 a barrel following a fall on Monday on expectations
of another rise in U.S. crude inventories as the deepening
downturn hits consumption.
Japanese government bond futures slipped on Tuesday,
tracking falls in U.S. Treasuries and euro zone government
bonds, and as stocks rebounded sharply from a three-month low.
Traders said the U.S. Senate's decision on Monday to back
Timothy Geithner as Treasury secretary had limited impact.
Analysts warned investor sentiment remained shaky, with
layoffs continuing and European and U.S. corporations
disclosing plans to cut more than 70,000 jobs to cope with the
downturn.
March 10-year JGB futures <2JGBv1> fell 0.40 point to
139.30, having sliding as low as 139.23 after a brief rebound
earlier.
The benchmark 10-year yield <JP10YTN=JBTC> rose 3 basis
points to 1.250 percent.
(Editing by Kim Coghill;
