Asia shares up on higher risk appetite, yen dips

SINGAPORE, Mar 20 (Reuters) Tokyo's Nikkei average rose nearly 1 percent on Tuesday, as exporters such as Toyota Motor Corp.

benefited from a weak yen, and other Asian markets gained as some risk appetite returned to world markets.

Financial spread betters expect Britain's FTSE 100 index to open steady, underpinned by news Dutch bank ABN AMRO and Britain's Barclays were in merger talks.

Oil climbed in Asia, extending a rally from Monday on worries about a shortage of gasoline supplies ahead of the peak U.S. summer driving season, while gold rose on renewed confidence after the metal breached a key resistance of 0 last week.

The Nikkei share average ended 0.9 percent higher, propped up by investors buying back beaten down stocks after the recent global equities sell-off. The broad TOPIX index added 0.8 percent.

''There is this sentiment in the market to buy strong players such as technology and real estate companies, and whether a market rise will continue depends on their performance,'' said Kenichi Hirano, operating officer at Tachibana Securities.

The Tokyo markets will be closed on Wednesday for a national holiday and will resume trade on Thursday.

MSCI's broadest index of Asia Pacific shares outside Japan was up 0.4 percent by 0620 GMT, encouraged by strength on Wall Street where the Dow Jones industrial average and the Nasdaq both rose almost 1 percent on Monday.

Financial markets are closely watching central bank meetings in the United States and Japan for clues on the direction of those economies, Hirano said.

The Bank of Japan decided on Tuesday to keep its policy rate unchanged at 0.5 percent, as expected. But the market's focus will be on a news conference by BOJ Governor Toshihiko Fukui later for clues on the economy and timing of the next rate rise.

The BOJ has vowed to raise interest rates gradually if the economy and prices move in line with its scenario.

Meanwhile the Federal Reserve, which meets for two days, will announce its interest rate decision on Wednesday.

YEN DEFENSIVE The yen fell against the dollar as rises in global equities indicated investors have greater appetite for risk. The yen had gained in recent weeks as investors sold off riskier assets that they had funded by borrowing yen.

The dollar rose to highs just above 118.00 yen before pulling back to 117.80 yen as of 0620 GMT, but still up from 117.53 yen in late U.S. trading on Monday.

The euro edged up to 156.65 yen from around 156.35 yen.

The Australian dollar hit a 10-year high of 80.35 U.S.

cents on speculation the country's central bank could raise rates as early as next month to fight inflation.

The soft yen pushed exporters higher. Honda Motor rose 0.7 percent and electronics components manufacturer Kyocera Corp.

gained 1.1 percent. Toyota was up 0.9 percent.

Australian shares rose 0.3 percent with top miners and banks leading the way. Gold miners climbed after the price of the metal rose to its highest in more than a week on Monday.

Spot gold hit an intraday high of 6 an ounce, just below Monday's 1-week high of 6.25, before slipping.

Other market indexes in Asia were mostly higher but had retreated from early highs.

Hong Kong's Hang Seng rose 0.5 percent, Taiwan's main TAIEX and Seoul's KOSPI were flat, while Singapore's Straits Times Index was up 0.9 percent.

U.S. crude for May delivery, the most actively traded contract, rose 39 cents to .09 a barrel.

Japanese government bonds edged up on last-minute buying by portfolio managers before the fiscal year ends later this month.

The benchmark 10-year yield dipped 1.5 basis points to a one-year low of 1.560 percent as pension funds and others picked up longer-dated bonds.

REUTERS PV DB1344