Fw: GLOBAL MARKETS-Oil at 7-mth high, props up Asia resource stocks

Subject: GLOBAL MARKETS-Oil at 7-mth high, props up Asia resource stocks To: Date: Thursday, June 11, 2009, 11:16 AM GLOBAL MARKETS-Oil at 7-mth high, props up Asia resource stocks (2009/06/11 11:04AM) --------------------------------------------------------------------------------     * Oil rises to fresh 7-month highs as commodities climb     * Australia dollar climbs back above $0.80     * US Treasury yields tick lower after 10-yr jumps to 4 pct     * Asia ex-Japan resource stocks test 7-month highs     By KevinPlumberg     HONG KONG, June 11 (Reuters) - Commodity-related stocks in Asia and the Australian dollar rose for a third straight day on Thursday as oil prices extended gains, keeping a rising trend in raw materials prices intact.     U.S. Treasuriesedged higher, after the benchmark 10-year yield  advanced to 4 percent overnight, the highest since Oct 16, on concern about how expensive it will be for the U.S. government to finance its growing budget deficit.     The U.S. dollar fellagainst the euro ahead of an $11 billion auction of 30-year bonds later.     The relationship between oil and the dollar continued to be an inverse one, with tight inventories squeezing crude prices to the highest since late October.     "Oil pricescontinue their march to, and then beyond, $75 per barrel. Our forecast of an average $85 a per barrel for 2010 appears well on track, and we believe further upside price risk exists incoming quarters," Barclays Capital analysts said in a researchnote.     London Brent crude oil futures  touched a seven-month high of $72.25 a barrel, following U.S. data showing tighter inventories. U.S. light crude for July delivery was up 0.8 percent to $71.90 .     Japan''s Nikkei share average<.N225> briefly poked above the psychologically key 10,000 to an eight-month high but was down 0.2 percent by late morning on worries that rising interest rates in U.S. bond markets could thwart an economic recovery.     Still, shares of Nippon SteelCorp <5401.T> and other steel companies jumped and held on to gains on a Morgan Stanley upgrade of its sector ratings.     The benchmark S&P/ASX 200 index <.AXJO> in resource-rich Australia edged up 0.2 percent, due mainly to a 14 percent surge inshares of Fortescue Metals  on market rumours of Chinese takeover interest.     The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> was largely flat on the day, but the materials sector index <.MIAPJMT00PUS> was up 1.3 percent     The sub-index has risen 79 percent in the last three months, and the 90-day correlation with the Australian dollar has tightened to 0.98.     The Australian dollar was up around 1 percent at US$0.8092 , boosted after a report showednational employment fell much less than expected in May. The data was interpreted by the market to mean the Reserve Bank of Australia has fewer reasons to lower interest rates further to support the economy. [ID:nSYD423590]     The New Zealand dolla  rallied more than 1.2 percent to $0.6330/40 after the central bank kept its interest rate steady at a record low 2.5 percent and pledged to keep it there through next year, a move seen ending its aggressive easing cycle to combat recession asthe economy shows tentative signs of bottoming out. [ID:nWEL502629]     The euro rose about 0.4 percent to $1.4020 , but trading remained choppy, with the market''s focus torn between higher U.S. yields, pronouncements from reserve managers ontheir Treasury holdings and the trajectory of interest rates in the euro zone.     Some analysts were positive about the dollar''s outlook, because of sustained interest by foreign official investors as well as private investors looking for higheryields.     "The dollar gained following the steepening of the U.S. yield curve, which is certainly good news as it suggests the dollar can do well in an environment of rising yields, particularly should sovereign concerns abate," said Brian Kim,currency strategist with UBS, in a note to clients.     The benchmark 10-year U.S. Treasury yield slipped to 3.94 percent  after rising as high as 4 percent on Wednesday. This week Treasuries have been under pressure because of $65 billio in new supply coming to the market.     Higher Treasury yields have a domino effect on the economy, since key rates for loans like mortgages are benchmarked to them. So, in the last three weeks, the 30-year U.S. mortgage rate has risen 88 basispoints, according to the Mortgage Bankers Association, at a precarious time when the housing market is slowly stabilising.     Japanese government bonds also sold off, pushing up the 10-year yield to the highest since late October, at 1.555 percent . (Additional reporting by Maryelle Demongeot in SINGAPORE) (Editing by Kim Coghill) ((Reuters Messaging: kevin.plumberg.reuters.com@reuters.net Email: kevin.plumberg@thomsonreuters.com; +852 2843-6370))