GLOBAL MARKETS-Asia stocks gain, gold retreats on Obama hopes

* Asia stocks up about 1 pct, pull away from 1-month low

* Dollar, gold and government bonds lose ground

* Eyes on quick action by incoming Obama administration

* Activity subdued before U.S. national holiday

By Eric Burroughs

HONG KONG, Jan 19 (Reuters) - Asian stocks pushed higher on Monday and the dollar lost ground as investors looked for U.S. President-elect Barack Obama to quickly roll out hefty economic stimulus spending and a revived plan to buy bad bank assets.

Obama is set to take office on Tuesday following a U.S. national holiday on Monday, and many investors have hoped for weeks that he will act aggressively to try to pull the economy out of its deep, year-long recession.

A top Obama adviser, David Axelrod, said the incoming administration is considering setting up a government-run bank to acquire bad assets -- the original purpose of the $700 billion Troubled Asset Relief Program. [ID:nN18459811]

Stocks have clawed back after the U.S. government injected $20 billion of capital into Bank of America BAC.N last week and offered debt guarantees to help its take-over of Merrill Lynch MER.N.

Barclays Plc BARC.L responded to a 25 percent tumble in its shares on Friday by saying it expects to report a pre-tax profit for 2008. The move came as news reports said Britain is poised to unveil a nearly $300 billion toxic debt guarantee for its banks later on Monday, its second bank rescue package in four months.

A year and a half into the credit crisis, renewed fears that major financial institutions will be forced to write down billions of dollars more in assets and raise significant capital drove many major equity indexes to one-month lows last week.

“The focus is now on the inauguration of the U.S. president. Hopes are growing again as economic stimulus steps will likely be bigger than previously thought, and may include additional measures to shore up banks,” said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.

Investors are bracing for more dismal news from companies as quarterly earnings season kicks into high gear, which could deal another blow to the rebound in stocks and emerging market currencies from lows hit late last year.

The MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS rose 0.9 percent and is up 21 percent from a five-year low hit in November. The MSCI index had been up as much as 37 percent from that low early in January.

Japan's Nikkei average .N225 gained 0.3 percent, helped by a broad dip in the yen that gave a boost to shares of major exporting companies. Shares of Honda Motor Corp 7267.T were the second-biggest gainer in the Nikkei.

South Korea's KOSPI .KS11 rose 1.4 percent, leading gains in the region as battered technology shares advanced on hopes the industry downturn may have hit a bottom.

South Korean markets largely shrugged off comments from a U.S. expert that North Korea had “weaponised” enough plutonium stocks to produce four to five nuclear weapons. [ID:nSP371965]

But Hong Kong's Hang Seng index .HSI slipped 0.1 percent, dragged down by a 3.7 percent drop in index heavyweight bank HSBC 0005.HK on continued fears it may have to raise more capital and cut its dividend.

Highlighting the slight improvement in risk appetite, the benchmark iTraxx Asia ex-Japan credit derivatives index <0#ITAIGMPBMK=> narrowed to 293 basis points from 320, traders said.


Traditional safe havens -- the dollar, government bonds and gold -- backtracked as investors shifted into riskier assets.

The euro edged up 0.3 percent to $1.3350 EUR=, up from a one-month low near $1.3025 hit last week. The dollar was up 0.4 percent versus the yen at 91.05 yen JPY=, getting a lift from the yen's broad retreat.

The Australian dollar jumped 1.3 percent against the yen to 61.85 yen AUDJPY=R, despite a retreat in commodity prices. The Aussie tends to move in close tandem with metals because the country is a big exporter.

Gold prices XAU= fell $1.85 an ounce to $840.00, while U.S. crude oil for February delivery CLc1 shed 30 cents to $36.21 a barrel.

Japanese government bonds also pulled back. The benchmark 10-year yield JP10YTN=JBTC climbed 3 basis points to 1.245 percent. Longer-dated bonds were hurt by dealers selling to hedge their books before a 30-year auction later in the week.

But the two-year yield JP2YTN=JBTC edged down a basis point to 0.350 percent, a three-year low that caused the yield curve to steepen.

“One key is whether the stock market will show signs of bottoming out as the Obama administration gets started,” said Naomi Hasegawa, a senior fixed-income strategist for Mitsubishi UFJ Securities.