* Asia stocks up 1.8 pct, eye on Fed decision/ECB tender
* Taiwan shares jump on expected China investment
* Dollar steady after slide, oil gives up gains
* JGB 10-yr yield hits 3-mth low
By Eric Burroughs
HONG KONG, June 24 (Reuters) - Asian stocks bounced up on
Wednesday from a one-month low hit the previous day while the
dollar drifted, with investors bracing for a Federal Reserve
decision and any signs the central bank is worried about the
jump in U.S. bond yields.
Futures on European shares <.STXEc1> pointed to gains in
early trade.
Taiwan's TAIEX index <> led the gains in Asia, jumping
2.95 percent on speculation that the country will sign an
agreement with China that could spur investment in its
financial industry. []
The rise in stocks was limited across the continent before
the outcome of the Fed meeting.
The U.S. central bank is widely expected to keep interest
rates on hold at a record low and keep its planned debt
purchases unchanged. So the focus is on whether it tweaks its
statement to rein in a slide in U.S. Treasuries that has
threatened the economy's budding recovery. []
Benchmark Treasury yields surged to an eight-month peak
above 4 percent earlier in the month, pushing up mortgage rates
and offsetting the Fed's efforts to help the economy by buying
hefty amounts of government and mortgage-related debt.
Investors have started to question how the Fed will step
back from its array of emergency programmes to stem the crisis
and whether its quantitative easing will stoke inflation.
"The Fed will likely attempt to assure markets that it will
have a credible exit strategy when the time is right," said
analysts at Calyon in a note to clients.
The dollar found its footing after a sharp slide the
previous day, the latest volatile move across markets in the
last days of the second quarter.
Government bonds also have recovered on building doubts
about the strength of any economic recovery. Japan's 10-year
government bond yield hit a three-month low.
Market players are keeping a close eye on the results of a
special one-year unlimited funding operation the European
Central Bank is offering to banks, looking for signs of
financial strain in the euro zone if demand is sizeable.
[]
The MSCI index of Asia-Pacific shares outside Japan
<..MIAPJ0000PUS> climbed 1.8 percent, steadying after hitting a
one-month low the previous day.
Financials and technology shares led gains. Taiwan's Cathay
Financial <2882.TW> was up 6.9 percent, while South Korea's LG
Display <034220.KS> rose 2.7 percent.
Asian shares outperformed their U.S. counterparts after the
S&P 500 <.SPX> edged up 0.2 percent on Tuesday.
Japan's Nikkei average <> climbed 0.4 percent,
underpinned by a rise in energy shares such as Inpex <1605.T>
after a jump in oil prices the previous day.
The market shrugged off Japanese data showing exports
tumbled 40.9 percent in May from a year earlier, underscoring
that any recovery in global trade is going to be a slow one.
[]
Crude oil backed down in Asia, slipping 64 cents a barrel
to $68.60 <CLc1>.
Despite the slight gains in stocks, Japanese government
bonds extended their winning streak as portfolio managers have
reinvested funds from $105 billion of maturing bonds this
month, analysts said.
A solid auction of two-year Treasuries on Tuesday also
helped boost JGBs.
The 10-year JGB yield <JP10YTN=JBTC> dropped 2.5 basis
points to 1.380 percent, the lowest since early April.
In currencies, the dollar edged up 0.3 percent to 95.50 yen
<JPY=>. The euro was up 0.4 percent at $1.4123 <EUR=>.
The yen fell across the board on expectations that the
launch of new Japanese mutual funds targetting foreign assets
would draw hefty subscriptions from household investors.
(Editing by Jan Dahinten)
