RPT-GLOBAL MARKETS-Stocks up as oil dips 4th straight session
(Repeats to more subscribers, without any changes to text)
* Markets lower expectations of U.S. interest rate increases
* Asian stocks edge higher despite a fall on Wall Street
* Higher inflation seen as corn and soybean sharply up
SINGAPORE, June 18 (Reuters) - Asian shares edged up on Wednesday to extend a fragile two-day rise, as oil dipped for the fourth straight session, signalling lower costs for firms following a plan by top exporter Saudia Arabia to raise crude output.
The dollar steadied against the yen after slipping the previous day, while Japanese government bond futures rallied on Wednesday, boosted by receding expectations for aggressive interest rate increases in the United States and Europe.
"We believe that risks to growth have been overlooked by the markets, and expect the focus to shift back to growth sooner rather than later," UBS economists said in a note.
"To make verbal support on the dollar credible, policy action will be necessary to back up the market's view on future rate hikes. However, as both the housing market and the outlook of financial corporations remains at risk, any tightening in rates is unlikely soon," it said.
By 0250 GMT, dollar stood at 107.96 yen JPY=, steady from late U.S. trading on Tuesday, having retreated from a four-month high of 108.59 yen hit on trading platform EBS on Monday.
The euro was steady from late U.S. trade at $1.5517 EUR=, having rebounded from a one-month low of $1.5303 hit on Friday.
Soaring energy costs pushed U.S. producer prices sharply higher last month and U.S. housing starts fell to their lowest in 17-years, data showed on Tuesday, highlighting the dilemma the Federal Reserve faces in trying to tackle high inflation amid signs of weak economic growth. [ID:nN17336776]
Japan's Nikkei share average .N225 ended the morning session 0.4 percent higher, led by electronic equipment makers. NEC Electronics (6723.T) rallied 10 percent after Goldman Sachs upgraded its recommendation on the stock, citing possible forecast-beating earnings from the company.
The MSCI index of stocks in the Asia-Pacific region outside of Japan .MIAPJ0000PUS rose as much as 0.36 percent before paring gains to be up 0.2 percent.
Among Asia's indexes, South Korea's KOSPI added 0.3 percent and Hong Kong's .HSI crept up 0.2 percent.
The Asian gains came even though major U.S. stock indexes fell on Tuesday, hit by a sell-off in banks.
FED ON HOLD
The Federal Reserve is now seen almost certain to keep its benchmark rate at 2.0 percent at a two-day meeting next week.
By late U.S. trade on Tuesday, futures dealers had reduced the implied chance for a rate rise at the August Federal Open Market Committee to 52 percent from 90 percent on Monday.
Banking shares led the sell-off on Wall Street after Goldman Sachs analysts said the sector may need to raise $65 billion of additional capital to cope with mounting losses from the credit crisis that they do not expect to peak until 2009.
Oil prices eased on Wednesday, with U.S. crude futures for July CLc1 down 61 cents at $133.40 a barrel, taking four-day losses to over 2.4 percent. The contract briefly hit a record of nearly $140 on Monday.
OPEC kingpin Saudi Arabia has promised to ramp up production to its fastest rate in decades, UN chief Ban Ki-moon was quoted as saying last weekend.
Crude's near-40 percent surge so far this year has fuelled fears of lower consumer demand and business investment around the world and confounded central bankers caught between sluggish global growth and rising inflation.
Pointing to more inflationary pressures ahead, U.S. corn and soybean prices closed near record highs on Tuesday as flooding in the U.S. Midwest damaged U.S. crop prospects.
In the Japanese government bond market, September 10-year futures jumped 0.72 point to 133.87 2JGBv1. Last week, the lead contract fell as low as 132.05, its lowest since July last year.
Gold XAU= prices fell to $882.85/883.85 an ounce from $884.20/885.40 late in New York on Tuesday.
