Asia stocks gain ground; oil rally stalls

SINGAPORE, Apr 2 (Reuters) Japanese stocks notched up modest gains, while South Korean shares hit a five-week high on hopes for a trade deal with the United States, but oil stalled after a two-week rally ran out of steam.

The yen slipped as a rise in Tokyo share prices eased concerns about risk aversion among investors, but it shrugged off a slight dip in business confidence among big Japanese manufacturers.

The March tankan survey showed that Japanese companies are slightly less optimistic about business conditions than they were three months ago, though dealers said that had little impact on the Japanese market.

''As long as the tankan doesn't deviate too sharply from forecasts, the market is likely to have a neutral reaction to it,'' said Yutaka Miura, senior technical analyst at Shinko Securities in Japan.

Oil prices eased but held just under a barrel following a near two-week rally on tensions over Iran's capture of British military personnel and worries over U.S. gasoline supplies ahead of summer driving season.

Tokyo's Nikkei rose 0.5 percent by midsession, with shares of Nikon Corp. up more than 3 percent after a newspaper reported the maker of cameras and chip equipment would beat its own forecast for the year to March and post record earnings.

MSCI's broadest index of shares elsewhere in Asia was up 0.5 percent by 0211 GMT.

Stocks benchmarks in Hong Kong, Taiwan and Singapore rose between 0.4-0.8 percent.

The Shanghai Composite Index was up 1.2 percent.

SEOUL HITS FIVE-WEEK PEAK South Korea's KOSPI index hit a five-week high as looming trade pact with the United States lifted key export firms in the auto and technology sectors such as Hyundai Motor Co. and LG.Philips LCD ''An FTA would be good news for Korea because the economy depends so much on exports. An opening of the U.S. market could increase exports substantially, and it could be an incentive to add gains to the stock market,'' said Cho Seong-joon, an analyst at Meritz Securities.

But shares in Australia fell 0.7 percent on cautious trade ahead of the Australian central bank's interest rate meeting.

U.S. stocks ended little changed on Friday at the end of the quarter as word the United States had imposed duties on some Chinese imports offset strong economic news and a pullback in oil prices.

The quarter saw bouts of increased volatility, with investors worrying that problems in the subprime mortgage market may seep into the broader economy and hurt profits.

The Dow Jones industrial average edged up 0.1 percent while the the Nasdaq Composite Index gained 0.2 percent.

The dollar stood at 117.78 yen as of 0213 GMT, up slightly from around 117.75 yen before the tankan's release and around 117.80 yen in late U.S. trading on Friday.

The euro was steady at 157.16 yen NYMEX crude for May delivery was up 3 cents at .90 a barrel.

Gold traded around 4.6/665.1 an ounce from 3.70/664.70 late in New York on Friday, when it rose more than SINGAPORE, Apr 2 (Reuters) Japanese stocks notched up modest gains, while South Korean shares hit a five-week high on hopes for a trade deal with the United States, but oil stalled after a two-week rally ran out of steam.

The yen slipped as a rise in Tokyo share prices eased concerns about risk aversion among investors, but it shrugged off a slight dip in business confidence among big Japanese manufacturers.

The March tankan survey showed that Japanese companies are slightly less optimistic about business conditions than they were three months ago, though dealers said that had little impact on the Japanese market.

''As long as the tankan doesn't deviate too sharply from forecasts, the market is likely to have a neutral reaction to it,'' said Yutaka Miura, senior technical analyst at Shinko Securities in Japan.

Oil prices eased but held just under $66 a barrel following a near two-week rally on tensions over Iran's capture of British military personnel and worries over U.S. gasoline supplies ahead of summer driving season.

Tokyo's Nikkei rose 0.5 percent by midsession, with shares of Nikon Corp. up more than 3 percent after a newspaper reported the maker of cameras and chip equipment would beat its own forecast for the year to March and post record earnings.

MSCI's broadest index of shares elsewhere in Asia was up 0.5 percent by 0211 GMT.

Stocks benchmarks in Hong Kong, Taiwan and Singapore rose between 0.4-0.8 percent.

The Shanghai Composite Index was up 1.2 percent.

SEOUL HITS FIVE-WEEK PEAK South Korea's KOSPI index hit a five-week high as looming trade pact with the United States lifted key export firms in the auto and technology sectors such as Hyundai Motor Co. and LG.Philips LCD ''An FTA would be good news for Korea because the economy depends so much on exports. An opening of the U.S. market could increase exports substantially, and it could be an incentive to add gains to the stock market,'' said Cho Seong-joon, an analyst at Meritz Securities.

But shares in Australia fell 0.7 percent on cautious trade ahead of the Australian central bank's interest rate meeting.

U.S. stocks ended little changed on Friday at the end of the quarter as word the United States had imposed duties on some Chinese imports offset strong economic news and a pullback in oil prices.

The quarter saw bouts of increased volatility, with investors worrying that problems in the subprime mortgage market may seep into the broader economy and hurt profits.

The Dow Jones industrial average edged up 0.1 percent while the the Nasdaq Composite Index gained 0.2 percent.

The dollar stood at 117.78 yen as of 0213 GMT, up slightly from around 117.75 yen before the tankan's release and around 117.80 yen in late U.S. trading on Friday.

The euro was steady at 157.16 yen NYMEX crude for May delivery was up 3 cents at $65.90 a barrel.

Gold traded around $664.6/665.1 an ounce from $663.70/664.70 late in New York on Friday, when it rose more than $2 an ounce, its safe haven status boosted by tensions between Iran and Britain and a weaker U.S. dollar.

Japanese government bonds eased as investors took profits at the start of the new business year and ahead of a key auction.

June futures were down 0.04 points at 134.11.

Reuters AKJ GC0915 an ounce, its safe haven status boosted by tensions between Iran and Britain and a weaker U.S. dollar.

Japanese government bonds eased as investors took profits at the start of the new business year and ahead of a key auction.

June futures were down 0.04 points at 134.11.

Reuters AKJ GC0915