Asian stocks shine, dollar subdued before US data

HONG KONG, June 1 (Reuters) Asian stock markets extended gains on Friday, with South Korea and Singapore scaling fresh peaks as worries about the Chinese market all but fizzled out and U.S. shares hit another record high.

The strength in equity markets weighed on fixed income assets, dragging Japanese government bonds lower, while the dollar hovered below a three-month high against the yen ahead of closely watched U.S. payroll data later on Friday.

London Brent crude oil held above $68 a barrel after snapping a four-day losing streak when data showed U.S. crude inventories fell last week, while gold extended its rebound to a 1-1/2-week high of $663 an ounce.

Japan's Nikkei <.n225> was up 0.6 percent at the end of the morning session after briefly rising above 18,000 for the first time in three months as investors snapped up exporters such as Toyota Motor and Canon Inc. following data pointing to a revival in U.S. factory activity.

Other reports on Thursday showed the U.S. economy grew at its weakest pace in more than four years in the first quarter of 2007, but key components of the data suggested resilience, raising hopes that growth may quicken later in the year.

''While the GDP data was revised down, if you look closely at the figures, there are some positive numbers. I think the Tokyo market is reacting to that,'' said Takashi Ushio, head of investment strategy at Marusan Securities.

Shanghai's SSE composite index <.ssec> climbed 1 percent in early trade, continuing to recover from Wednesday's 6.5 percent slide, while South Korea's KOSPI <.ks11> powered up nearly 2 percent to a record high of 1,734.05.

Samsung Electronics and Hynix Semiconductor rose 3 percent and 6 percent respectively on hopes that prices for DRAM memory chips may have bottomed and following robust results from Dell Inc. , the world's number two computer maker.

The MSCI index of Asian stocks outside Japan <.msciapj> rose 1 percent by 0218 GMT after also reaching an all-time high of 450.24.

Among other markets, Australia's S&P/ASX 200 index <.axjo> added 0.4 percent thanks to gains in miners such as BHP Billiton , Taiwan's TAIEX <.twii> gained 1.2 percent and Hong Kong's Hang Seng Index <.hsi> put on 0.2 percent.

In Singapore, where the market was closed for a holiday on Thursday, the Straits Times Index <.sti> reached a record high of 3,567.94.

On Wall Street, the S&P 500 index <.spx> eked out a record closing high for a second straight session, while the tech-heavy Nasdaq <.ixic> gained nearly 0.5 percent. The blue-chip Dow <.dji> closed flat after touching a record high.

DOLLAR STEADY The dollar held below a three-month high of 121.99 yen and dealers said it may have trouble moving much higher for now.

''I think the jobs data itself is unlikely to provide a positive surprise to the market,'' said Osamu Takashima, chief analyst at the Bank of Tokyo-Mitsubishi UFJ.

''The dollar has struggled to rise further this week and is likely to be that way beyond next week.'' The euro was little changed at $1.3452 after clawing off a seven-week low of $1.3406 plumbed earlier this week.

Remaining under pressure, Japanese government bonds (JGBs) slumped, with sentiment hurt by a fall in U.S. Treasuries and rising Japanese stocks. Lingering worries that the Bank of Japan could raise rates as early as August did not help.

The yield on the benchmark 10-year JGB hit a seven-month high of 1.770 percent, before stepping back to 1.765 percent, up 2 basis points.

''The rise in 10-year (U.S.) Treasury yields above 4.91 percent and the Nikkei closing in on the 18,000 level are enough to remind JGB investors of solid economic fundamentals within and outside Japan,'' said Akihiko Yokoyama, chief JGB strategist at JPMorgan Securities.

REUTERS SBC PM9000