* 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
By Wayne Cole
SYDNEY, July 2 Asian stocks scored a three-year
peak on Wednesday after a round of upbeat global economic data
whetted risk appetites and helped Wall Street taste all-time
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
"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 0.9 percent to 498.09, territory not
visited since May 2011. Japan's Nikkei added 0.5 percent
and notched up its loftiest level in more than five months.
The Dow and S&P 500 had both scored 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.
Top European shares ended up 0.85 percent, despite
some disappointing manufacturing data from the region.
The economic news elsewhere was 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 17 million annualised 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 $1.7149 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 79.835 from a two-month trough
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 $1,325.60 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)