Stocks bounce as Treasury yields dip; dollar up

SINGAPORE, June 14 (Reuters) Stocks in Asia rose around 1 percent on Thursday led by exporters such as Toyota Motor as US Treasury yields retreated and investors were reassured by signs of strength in the US economy.

The dollar held near a 4-{ year high against the yen, buoyed by US figures showing strong retail sales in May and a Federal Reserve report suggesting wage pressures had not increased.

''Investors are thinking the economy is doing well as the stock market has calmed down and they see few signs of inflation,'' says Koji Fukaya, senior currency strategist at Deutsche Bank in Tokyo.

''Unless this trend collapses, the dollar will stay firm.'' Investors kept watch on the debt market, with some reckoning a three-week sell-off may be at an end.

The rout in US Treasuries has pinned benchmark yields, which govern consumer and corporate lending, to 5-year highs as investors priced in the likelihood that the US Federal Reserve will keep rates higher for longer.

On Wall Street on Wednesday, the Dow Jones industrial average <.dji> rose 1.4 percent -- its best day in just under a year. The Nasdaq Composite index <.ixic> raced 1.3 percent higher.

Asian markets got off to a good start, with major indexes posting gains of around 1 percent or higher.

Tokyo's Nikkei <.n225> index was up 0.7 percent by the midsession, lifted by gains in Toyota and Honda Motor .

The benchmark was also boosted by industrial robot maker Fanuc , whose shares jumped 2.6 percent after it announced plans to build a new plant in Japan to boost its output.

South Korea's benchmark KOSPI <.ks11> raced up 1.7 percent by 0221 GMT and was within reach of its record high set a week ago. Both Hyundai Motor and steel maker POSCO saw hefty gains. In Australia, strength in commodity prices such as oil and copper helped drive major miners and oil-and-gas producers, such as BHP Billiton and Woodside Petroleum . The benchmark key S&P/ASX 200 index <.axjo> rose 0.9 percent.

MSCI's broadest index of shares elsewhere in Asia <.msciapj> had risen 1.2 percent by 0221 GMT.

BOND REPRIEVE After the benchmark U.S. Treasury yield backed off a 5-year high on Wednesday, the 10-year Japanese government bond yield dipped 2 basis points to 1.945 percent.

The yield has risen around 30 basis points in the past three weeks. The Bank of Japan begins a two-day policy review on Thursday but is expected to keep rates on hold for now.

September futures rose 0.16 of a point to 131.21, after jumping as high as 131.34 in early trade.

The dollar dipped slightly to 122.68 yen , but stayed close to a 4-1/2-year high of 122.77 yen hit late in New York trade.

The euro was little changed at $1.3306 , having plumbed an 11-week low of $1.3264 on Wednesday on eletronic platform EBS.

Oil prices rose back up to $70 a barrel after a U.S.

government report showed gasoline stockpiles remained well below normal levels at the start of the summer driving season.

Brent crude , representative of the global market, was up 6 cents at $70 a barrel, having jumped $1.15 in New York overnight.

Gold recovered after hitting a 3-month low in the previous session, with spot gold at around $651 an ounce, as bargain hunters returned.

REUTERS SG VC0916