SINGAPORE, May 2 (Reuters) The dollar rose on Tuesday against the euro and the yen and Japanese shares were higher as investors homed in on top companies after concerns over U.S. interest rates triggered a fall on Wall Street.
A report that the Federal Reserve chief Ben Bernanke said markets had misread his latest congressional testimony helped the dollar to extend a rebound from a one-year low against the euro and a seven-month low versus the yen.
Gold prices fell as investors booked profits after pushing up the metal to a 25-year high above $661 the previous day.
U.S. crude futures were firm within $2 of record highs after a two-day rebound fuelled by growing concerns over Iran and Nigeria.
In Tokyo, shares of Canon Inc. jumped 4 percent to a lifetime high after a brokerage lifted its earnings forecasts for the firm.
Top tyre maker Bridgestone Corp. gained 5.63 percent after raising its operating profit forecast for six months to June.
''Investors sometimes go after these leading firms when there are concerns about higher interest rates. In a sense, these are stocks with staying power ... On top of that, their earnings have been good,'' said Hideyuki Suzuki, investment information manager at SBI Securities.
The Nikkei was 1.22 percent higher ahead of the Golden Week holiday period from Wednesday when markets will close. Trading will resume on Monday.
Stocks elsewhere in Asia also were higher, but Sydney shares eased on uncertainty over interest rates ahead of Wednesday's announcement of the outcome of a rate review meeting of the Reserve Bank of Australia.
South Korean shares were bolstered by solid earnings by banks and wireless operators, but Hyundai Motor Co. fell for a third straight session, shedding 1.8 percent, after its chairman was arrested on charges of misusing company funds.
The MSCI index outside japan was up 0.26 percent.
DOLLAR RISES The dollar was buoyed after CNBC television reported on Monday that Bernanke told one of its reporters that the central bank was still aggressive on inflation and it had a flexible, rather than a dovish, stance on monetary policy.
His comments triggered a wave of short-covering in the dollar, which had come under renewed pressure after Bernanke told Congress last Thursday that the Fed may pause hiking rates at some point in the future.
In early Tokyo trade, the dollar rose to around 113.70 yen from around 113.35 yen in late U.S. trade and up more than one yen from a seven-month low of 112.34 yen hit on Monday.
The euro slipped to around $1.2575 down more than one cent from Monday's one-year peak of $1.2691.
Japanese government bonds fell, snapping a sharp two-day gain, as U.S. Treasury prices dropped on concerns the Fed may not pause its rate hike cycle as previously thought.
The benchmark 10-year yield rose 3 basis points to 1.905 percent. It hit the 2.0 percent level last month for the first time since August 1999.
Spot gold eased to $654.00/655.00 an ounce from $657.60/658.60 late in New York on Monday, when it jumped to another 25-year high of $661.10 on fund buying.
NYMEX crude for June delivery traded down 9 cents at $73.61 a barrel in ACCESS electronic trading by 0240 GMT, holding most of Monday's gain of $1.87. Prices have surged 3.7 percent in the past two days, bounding back toward their record high $75.35 a barrel touched just over a week ago.
On Wall Street, the Dow Jones industrial average ended down 0.21 percent and the Nasdaq Composite Index finished 0.77 percent lower.
REUTERS CS HT0912