GLOBAL MARKETS-Asian shares rebound on Wall St lead; yen softens

Reuters

* Asian stocks up, Australia hits five-year high

* Yen broadly softer as risk appetite improves

* European shares seen opening higher

By Ian Chua

SYDNEY, Oct 28 (Reuters) - Asian stocks rose on Monday withAustralia scaling a five-year peak after a record high finish onWall Street helped offset worries about tighter credit in China,while investors gave the safe-haven yen a wide berth.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, recovering a chunk of lastweek's 1.1 percent loss -- the biggest in two months -- that wasdriven by concerns that China may tighten monetary policy tokeep prices under control.

European shares were seen opening higher with financialspreadbetters expecting gains of around 0.3-0.5 percent forGermany's DAX, France's CAC 40 and Britain'sFTSE 100.

"Yet more gains in the U.S. on Friday and a positivehandover from Asia are set to fuel the bulls on the Europeanopen," Jonathan Sudaria, trader at London Capital Group, said ina trading note.

Japan's Nikkei climbed 2.2 percent, clawing backmost of Friday's 2.7 percent drop, while Australian shares put on 1.0 percent to end at a five-year high.

Hong Kong's Hang Seng lagged, adding a modest 0.6percent, and mainland Chinese stocks were flat,highlighting underlying concerns about China's attempts to coolconsumer inflation and runaway property prices.

"The focus this week will be earnings, China's money ratesand the PMI number at the end of the week," said Jackson Wong,Tanrich Securities' vice-president for equity sales.

"Flows are quite slow today and investors will likely stayon hold for the rest of this week with so much China policyuncertainty at this point," he added.

Last week, China's money rates shot up to their highestsince June's dramatic cash crunch. They retreated a touch onMonday.

Several markets in Asia are closed for public holidays onMonday, including New Zealand and the Philippines.

RISK IN PLAY

With risk appetite on the mend for now, demand for thesafe-haven yen waned. That saw the Australian dollar gain 0.7percent to 93.77 yen, and both the euro and dollaredged up 0.2 percent to 134.76 and 97.65 respectively.

Against the dollar, the euro was steady at $1.3802 and within striking distance of Friday's two-year high of$1.3833.

The dollar has been under broad pressure in the past fewweeks on growing expectations the Federal Reserve will maintainits massive stimulus programme into next year.

The Fed's policy-setting arm, or Federal Open MarketCommittee, meets on Oct 29-30 and is expected to hold off on anymove to scale down its $85 billion monthly bond-buyingprogramme.

Analysts believe policymakers want to see the impact of theU.S. budget battle that took the country to the brink of a debtdefault and caused a partial government shutdown.

"The FOMC should be a non-event... the Washington debatescloud the growth outlook, so forget about tapering," analysts atJPMorgan wrote in a client note, adding the April 2014 meetinglooked like the soonest any tapering would be announced.

In contrast to equities, commodities were more subdued withcopper 0.2 percent lower at $7,174 a tonne, while U.S.crude oil slipped 0.2 percent to $97.64 a barrel.

Spot gold was a touch softer at $1,350 an ounce, butnot far off a five-week high of $1,355.20 set Friday.

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