the panic is almost over

HONG KONG, Sept 4 (Reuters) - Asian stocks touched one-month
highs on Tuesday as worries about a global credit squeeze
continued to recede, but caution ahead of influential U.S. data
this week kept a lid on markets and major currencies.

European stocks were predicted to open lower, struggling for
direction, with London's FTSE 100 <.FTSE> seen off 12-14 points,
according to financial bookmakers, after rising 0.2 percent on
Monday. [ID:nL04186537]

Tokyo's Nikkei sagged as investors worried about recent
disappointing economic data, while safe-haven Japanese
government bonds (JGBs) rose after an auction of 10-year notes
attracted fair demand.

"The worst from the U.S. subprime mortgage crisis appears to
be over, and the main question left is whether the Fed will
lower interest rates at its Sept. 18 meeting," said Kim
Hak-kyun, an analyst at Korea Investment and Securities.

MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> rose 0.5 percent by 0620 GMT after earlier
reaching levels last seen on Aug. 1, but Tokyo's Nikkei average
<.N225> fell 0.6 percent, extending Monday's 0.3 percent dip.

Hong Kong's Hang Seng Index <.HSI> hit a record high, led by
China Construction Bank <0939.HK> after Beijing said it would
review the lender's plans for a domestic share sale.
[ID:nSHA323656]

Australia's S&P/ASX 200 index <.AXJO> climbed for a fourth
straight session, up 0.4 percent at a six-week closing high,
boosted by data showing stronger-than-expected economic growth
in the past quarter. [ID:nSYD36520]

Korea Exchange Bank <004940.KS> finished 1.7 percent higher,
after climbing as much as 8.2 percent at one stage following
news that Europe's biggest bank HSBC will buy 51
percent of the South Korean lender. [ID:nL03640596]

HSBC's Hong Kong shares <0005.HK> edged up 0.1 percent.

RECOVERING

The MSCI index has risen in the past two weeks and is now up
19 percent from a five-month trough plumbed on Aug. 17 but still
down about 5 percent from its July 24 record high.

Markets have generally been on a recovery path since the
U.S. Federal Reserve slashed a key bank lending rate on Aug. 17
to help soothe fears of a credit shortage stemming from the U.S.
subprime mortgage crisis.

Comments from U.S. President George W. Bush and Fed Chairman
Ben Bernanke late last week about tackling the credit problem
have further helped shore up sentiment.

But data on Monday showing Japanese firms unexpectedly cut
capital spending by 4.9 percent in April-June from a year
earlier weighed on the Nikkei.

"There's no doubt these figures raised doubts about Japanese
domestic consumption and this has led to some selling of related
shares. There really is no big reason to buy," said Tsuyoshi
Nomaguchi, strategist at Daiwa Securities.

YEN STEADY

Forex investors took a wait-and-see attitude ahead of a
flood of U.S. data, keeping the major currencies in a narrow
range.

"The panic is almost over, but the market has lost its
direction and is waiting for more news, especially any good
news," said Kikuko Takeda, currency strategist at Bank of
Tokyo-Mitsubishi UFJ. "People know it'll take some time to
restore normal market conditions. There is no quick solution."

The dollar bought 115.81 yen , little changed from
115.97 yen in London trade on Monday, while the euro was at
$1.3622 compared with $1.3624 in London.

Against the yen, the single currency was also steady near
157.76 yen .

But the Australian dollar jumped to a week high near
82.70 U.S. cents after strong economic growth data revived
speculation of interest rate hikes.

In the commodity market, U.S. crude hovered above $74
a barrel after OPEC kept a lid on output in the run-up to its
Sept. 11 ministerial meeting. Spot gold edged above $673
an ounce.

Japan's benchmark 10-year JGB yield eased two
basis points to 1.615 percent after the 10-year JGB auction.
[ID:nT281158]

"It looks like the auction drew more demand than expected
from dealers to cover short positions," said Keiko Onogi, senior
JGB strategist at Daiwa Securities SMBC.