* Asia stocks climb 1 pct as Bernanke reassures on banks
* Yen extends slide on grim economy, hedge fund selling
* Chart technicals help underpin stocks, hurt yen
By Eric Burroughs
HONG KONG, Feb 25 (Reuters) - Asia stocks edged up on
Wednesday as reassuring comments from Federal Reserve Chairman
Ben Bernanke sparked a rebound in battered financial shares,
while the yen slid further on Japan's mounting economic and
political troubles.
Safe-haven government bonds retreated as investors shifted
funds into riskier assets, while gold steadied after having
soared in the past few weeks on mounting fears about the
financial health of countries trying to contain the crisis.
Bernanke said the government did not have plans to
nationalise major banks at this stage, remarks that put to ease
some worries that the largest U.S. banks may need to be taken
over because of huge hits to their balance sheets from the
global credit crisis. []
The yen hit a three-month low beyond 97 to the dollar as
investors have turned against Japan on the country's deepening
recession that is the worst among major economies, forcing
hedge funds and other market players to unwind bets favouring
the yen. []
Data showed Japanese exports plunged a record 45.7 percent
in January from the previous year, pointing to another sharp
contract in economic activity in the first quarter of the year.
[]
But Japanese shares were helped in part by reports that the
government may start directly buying stocks to support the
market and ease the strain on the country's big banks, whose
large equity portfolios have suffered heavy losses.
"It's good news, but what the market really wants is
large-scale economic measures with the Japanese economy having
deteriorated the most among developed countries," said Takahiko
Murai, general manager of equities at Nozomi Securities in
Tokyo.
Japan's Nikkei average <> climbed 1.2 percent, holding
off a 26-year low struck last October. The MSCI index of
Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was up 1
percent after hitting a three-month low earlier in the week.
The gains lagged a 4 percent jump in the U.S. S&P 500
<.SPX> on a surge in financial shares.
Investors showed little reaction to U.S. President Barack
Obama saying he has identified $2 trillion in costs that can be
cut over the next decade as he seeks to offset big fiscal
spending aimed at reviving the economy. []
Analysts said there were also technical reasons for the
gains in stocks and yen slide.
The S&P 500 <.SPX> has held above its intraday lows touched
last November that suggested the near-term downside may be
limited, while the yen's fall took its through chart levels
that spurred further selling.
The dollar climbed along with most major currencies against
the beleaguered yen. The dollar struck a three-month peak of
97.20 before slipping back to 96.95 yen <JPY=>, up 0.3 percent
on the day.
On Tuesday the dollar broke through a series of chart
resistance levels -- including the low of 95.70 struck in March
last year and the 38.2 percent retracement of its slide between
August and January.
The yen's fall even as stocks have slid has broken down one
of the key correlations driving markets over the past year or
so -- falling stocks spurring a drop in higher-yielding
currencies against the yen as carry trades are unwound.
Traders have said the change suggests that many such carry
trades -- using the low-yielding yen to buy higher-yielding
currencies or assets -- have largely been unwound.
Gold was up $1.85 an ounce at $964.05 <XAU=> but has
retreated from 11-month highs above $1,000 hit last week as
some safe-haven buying has ebbed and investors booked profits.
Oil was little changed at $39.93 a barrel <CLc1> after
climbing 4 percent the previous day along with the rebound in
equity markets.
In government bonds, the benchmark 10-year Japanese yield
rose 2.5 basis points to 1.290 percent <JP10YTN=JBTC> but has
held in a tight range around 1.25 percent and 1.30 percent over
the past two weeks.
(Editing by Kim Coghill)
