* China stocks highest since Jan as Wall St reaches records
* Asia shares ex-Japan try for second day of gains, Nikkei
* High Treasury yields, tariff talk dog emerging markets
* Dollar rally takes a breather, China's yuan at 6-yr trough
By Wayne Cole
SYDNEY, Nov 23 Asian stocks bounced to one-week
highs on Wednesday as investors tried to share in the exuberance
of Wall Street's record run, while lofty U.S. bond yields
favoured the dollar at the expense of emerging market
Spread betters pointed to opening gains for European
bourses, while E-mini futures for the S&P 500 held near
all-time peaks ahead of the release of minutes of the Federal
Reserve's last policy meeting.
With Japan on holiday, Australia's main index led
the action in Asia with a rise of 1.35 percent to a one-month
top helped by strength in bulk commodity prices.
China's blue-chip CSI300 index advanced 0.5
percent to a near 11-month peak as the yuan touched its lowest
in six years.
MSCI's broadest index of Asia-Pacific shares outside Japan
also added 0.6 percent, edging further away from
four-month lows hit on Monday.
Emerging markets have struggled in recent days as surging
U.S. bond yields sucked much-needed capital out of Asia.
President-elect Donald Trump's past talk of trade tariffs has
also weighed on sentiment in the export-intensive region.
Analysts at JPMorgan said Trump's pledge to dump the
Trans-Pacific Partnership was already priced into markets.
"What may not be factored in is the possibility of
follow-through on other, more protectionist campaign proposals,"
they wrote in a note to clients.
"We remain concerned about this as a source of downside
risk, delivering a negative surprise to markets which so far
appear to be enamoured of his emphasis on fiscal stimulus and
deregulation since the election."
That love-affair was evident on Wall Street where the Dow
closed up 0.35 percent and above 19,000 for the first
time. The S&P 500 gained 0.22 percent and the Nasdaq
Still, the market is starting to look expensive with the S&P
500 trading near 17.3 times forward 12-month earnings, compared
to the 10-year median of 14.7, according to StarMine data.
YIELD GAP UNDERMINES EURO
With equities in demand, U.S. bonds were getting the cold
shoulder. Two-year note yields rose as far as 1.107
percent on Tuesday, the highest since April 2010.
Yet euro debt was thrown a lifeline by European Central
Bankers who reaffirmed their commitment to super-easy monetary
policy. That saw yields on German two-year paper dive to record
lows around -73 basis points, which in turn expanded
the yield premium offered by Treasuries to an 11-year peak.
The widening spread kept the euro pinned at $1.0626,
not far from last week's one-year trough at $1.0569. Against a
basket of currencies, the dollar was steady at 101.00.
The dollar also kept most of its recent hefty gains on the
yen at 111.05, though it has met resistance around 111.35
in the last couple of sessions.
Sterling was precariously poised at $1.2417 ahead of
a budget update from British Finance Minister Philip Hammond.
Analysts expect some modest infrastructure spending and
housing stimulus, but nothing that would radically change
expectations of a weaker economy next year when difficult talks
begin on the terms of Brexit.
Oil prices were mostly steady for the moment as the market
hung on every comment from OPEC officials on whether cartel
members would agree to an output cut.
Brent crude eased 14 cents to $48.98 a barrel, while
U.S. crude lost 13 cents to $47.90.
Industrial metals advanced on talk of demand from China and
the whole global reflation trade. Copper was near a 16-month
high, while iron ore futures <0#DCIO:> surged 8 percent on the
back of higher steel prices.
(Reporting by Wayne Cole; Editing by Eric Meijer & Shri