Asia Stocks, Dollar Firm on Credit Hopes

European shares were set to open broadly unchanged.

Asian shares rose to their highest in more than seven weeks on Monday as financial firms gained on hopes the global credit crisis may have reached a turning point, which also boosted the dollar but sank safe-haven assets such as bonds.

The U.S. currency was near its highest level to the yen since early March, providing relief for Asian exporters, with the sector further comforted by stronger-than-expected quarterly results from U.S. firms such as Caterpillar

European shares were set to open broadly unchanged.

Swiss drugmaker Novartis AG posted better-than-expected quarterly profits, while Nestle said its sales grew slightly more than forecast. and

But oil prices hovered near a record $117 a barrel hit on Friday amid concerns of supply disruptions in Nigeria and comments by OPEC that it saw no need to increase production. Gold rebounded after the previous session's sell-off.

"The market is clearly trying to say that the worst of all these subprime and credit issues are now out, so we can move on," said Greg Goodsell, equity strategist at ABN AMRO.

"But it remains to be seen whether that is really the case. It's hard to be conclusive that there aren't further write-offs out there in the financial sector."

The MSCI measure of Asian stocks excluding Japan rose 2.6 percent by 0600 GMT, earlier hitting its highest level since Feb. 29.

The index has now risen around 16 percent since March 18, when it hit its lowest since August 2007, when credit concerns first began surfacing. But the index is still down more than 8 percent so far this year.

The turnaround has come as forecast-beating earnings from Merrill Lynch and JPMorgan Chase last week sparked hope the worst of the credit crisis may soon be over.

Citigroup Inc on Friday posted a $5.1 billion quarterly loss and said it will cut another 9,000 jobs, but its shares still gained amid expectations that the top U.S. lender was taking steps to move past its credit problems.

Also on Friday, results from diversified U.S. manufacturer Honeywell International Inc and construction and mining equipment maker Caterpillar beat expectations. and

BANKS' HOUSECLEANING

Tokyo's Nikkei average rose 1.6 percent, led by financials such as Mitsubishi UFJ Financial Group Exporters, which stand to benefit from a weaker yen, surged, with Honda Motor Co Ltd up 8.8 percent.

Australia's main index rose 3 percent, while Hong Kong gained 2.5 percent, and markets in South Korea, Singapore and India were all up 1-2 percent.

Improving confidence in the financial sector also lifted the dollar by 0.2 percent to 103.93 near a seven-week high of 104.66 hit on electronic trade platform EBS on Friday.

The euro was steady at $1.5815 off a record high of $1.5985 hit last week.

The euro zone currency has jumped more than 8 percent against the dollar this year as investors have been attracted by its yield appeal on expectations European interest rates will stay put, while the Federal Reserve is seen cutting U.S. rates.

Oil prices steadied at $116.71 a barrel, near the prior session's record $117, after a Nigerian rebel group said on Friday it sabotaged a major oil pipeline operated by Royal Dutch Shell

Crude was also supported after the president of the Organisation of Petroleum Exporting Countries (OPEC) told reporters the group saw no need to raise oil production. Spot gold rebounded to around $917 an ounce, after falling on Friday to as low as $904.35 when investors dumped safe-haven assets to add riskier assets such as stocks.

Investors also avoided lower-yielding Asian bonds.

Japanese June 10-year futures dropped 0.55 point to 138.05, falling at one point below the 138-level for the first time since late-February.