* Asian stocks mostly up, Nikkei highest in over five months
* Wall St reaches record peak on round of upbeat global data
* Sterling, South Korean won make the running as dollar lags
* Fed's Yellen to speak at 1500 GMT, potential risk to markets
By Wayne Cole
SYDNEY, July 2 (Reuters) - Asian stocks scored a three-year peak on Wednesday in the wake of upbeat global economic data that whetted risk appetites and helped Wall Street taste all-time highs.
Dealers said fund managers were rotating money out of bonds and into equities for the start of the second half of the year, nudging up U.S. Treasury yields.
At the same time, the outlook for super-low rates in the major economies and an almost eerie absence of volatility across markets, encouraged investors to take on leveraged bets in search of higher returns - the so-called carry trade.
"Global equity and credit markets are feeling the tailwind of firmer activity data in the world's largest economies, with the exception of the euro area," analysts at Barclays wrote in a client note.
"Our global manufacturing confidence recovered from the declines in Q1, and aggregate forward-looking components suggest the improvement should last well into the second half."
MSCI's broadest index of Asia-Pacific shares outside Japan gained 1 percent to 499.15, ground not visited since May, 2011. Japan's Nikkei added 0.3 percent and notched up its loftiest level in more than five months.
The Dow and S&P 500 had both hit record closing highs on Tuesday, as did the MSCI world equity index. The Dow gained 0.77 percent and the S&P 500 0.67 percent, while the Nasdaq put on 1.14 percent.
Spreadbetters predicted the major European markets would open steady on Wednesday, after the index of top European shares ended 0.85 percent firmer the previous session.
The economic news globally had been mostly bright with measures of manufacturing in China, Japan, the UK and United States all pointing to a pick-up in production.
In an encouraging sign for consumer demand, U.S. auto sales almost reached an annualised 17 million in June, way above forecasts and the strongest since 2006.
STERLING ON THE RISE
With money switching to riskier assets, bond prices gave up some of their recent gains. Yields on 10-year U.S. Treasuries ticked up to 2.57 percent, leaving behind last week's lows near 2.50 percent.
Losses should be limited, however, given expectations the Federal Reserve will keep rates near zero well into next year.
Later on Wednesday, Fed chair Janet Yellen will appear at an event with International Monetary Fund Director Christine Lagarde and dealers generally assume she will stick to her recent dovish script.
In currencies, sterling was up at $1.7150 after bullish UK data sent it as far as $1.7167 on Tuesday, its highest since October 2008.
Not far behind was South Korea's won, which hit its highest in six years at 1,009.3 per dollar. The rise prompted the authorities to warn the market against taking it too far, usually a prelude to intervention.
The U.S. dollar was dull, in contrast, making only slight gains on both the euro and yen. Its currency basket index inched up to 79.833 from a two-month trough of 79.740.
The Australian dollar was knocked off an eight-month peak when data showed the country's trade deficit widened by far more than expected in May, leaving it at $0.9455.
Gold eased back a touch to $1,325.50 an ounce having hit a 2-1/2-month high of $1,332.10 on Tuesday.
Brent crude lost 12 cents to $112.17 a barrel, while U.S. crude was quoted 5 cents firmer at $105.39. (Editing by Eric Meijer)