Global - Asian stocks, yen up after Japan growth data

Japan stocks led Asian markets higher on Tuesday after data showed the world's second-biggest economy growing faster than expected, while oil prices steadied below $59 a barrel after another fall.

The growth figures boosted the yen and sent Japanese bond yields sharply higher as investors priced in an increased risk that the Bank of Japan will raise interest rates in the next few months.

Gold traded near $623 an ounce, maintaining a steady position just below last week's two-month high around $636.

Japan's economy expanded 0.5 percent in the September quarter for an annualised growth rate of 2.0 percent, double market expectations, providing some relief after weaker-than-expected machinery order data last week.

"From these figures, we can say that the underlying trend of the economy remains bullish," said Takeshi Minami, chief economist at Norinchukin Research Institute.

By the end of the morning session, Tokyo's Nikkei average <.N225> had climbed 1.69 percent, picking up after two straight sessions of declines when investors were worrying that economic growth was faltering.

TECHS FIND FAVOUR

Among early Japanese gainers were domestic plays such as banks and property shares.

Number-two banking group Mizuho Financial Group <8411.t> jumped nearly 4 percent, while property firm Mitsubishi Estate Co. Ltd. <8802.t> gained 3.6 percent.

Spurred by positive broker comments for technology sector bellwether Intel Corp. , shares such as chip-tester maker Advantest Corp. <6857.t> of Japan and memory chip maker Samsung Electronics <005930.ks> of South Korea gained ground.

Advantest rose 3.45 percent, while Samsung Electronics, which on Monday forecast very strong demand for computer memory chips in the first quarter of 2007, added 1.41 percent.

Australia's Macquarie Bank climbed 1.41 percent after the investment bank beat forecasts with a 51 percent rise in first-half profit.

The MSCI index of Asian stocks outside Japan <.MSCIAPJ> advanced 0.59 percent by 0227 GMT, nearing a six-month high of 369.65 set a week ago.

South Korea's key KOSPI <.KS11> rose as much as 0.65 percent to a session peak of 1,405.79 -- its highest intraday level since May 16.

"This could be the beginning of an early 'Santa Claus' rally," said Cho Seong-joon, an analyst at Meritz Securities. "Japan's economy was stronger than expected, and that was a nice surprise."

FIRM YEN

Backed by a stronger-than-expected economy, the yen rallied against the dollar and the euro.

The dollar bought 117.67 yen in Asia, down from levels above 118 yen in New York, while the euro fetched 150.78 yen , down from more than 151 yen earlier.

Analysts said the strong growth data has kept alive the chance of a second interest rate increase this year, although most market players are still betting on a move early next year.

The yield on the Japanese 10-year bond jumped to 1.715 percent, rebounding from a six-week low of 1.655 percent on Monday.

Benchmark U.S. crude rose 13 cents to $58.71 a barrel, finding a steadier footing after falling on Monday and Friday as mild U.S. weather kept a lid on demand for heating oil and on concerns about rising inventories in consuming nations.

The contract had been trading above $61 on Thursday.

Doubts that OPEC would deliver on its agreed crude production cut also weighed on oil prices.

"There are growing concerns about the lack of OPEC compliance," said Bill O'Grady, analyst at A.G. Edwards. "If OPEC isn't cutting back as much as it says it is, it will be hard for prices to stay afloat."