Asia up on Wall Street's lead, dollar holds gains

TOKYO (Reuters) - Asian stocks rose on Tuesday, following a positive lead from Wall Street, while the dollar held onto its gains after rebounding against the euro and yen on higher U.S. Treasury yields.

The region's focus fell on the Reserve Bank of Australia's policy decision due at 0430 GMT. Expectations are that the central bank would cut interest rates further in the wake of falling prices of iron ore, the country's biggest export.

The prospect of more monetary easing has pushed the Australian dollar to around six-year lows while shoring up the country's share prices.

Australian shares <.AXJO> rallied 1.2 percent, while the Aussie was steady at $0.7613 , not too far from the six-year low of $0.7534 plumbed last week.

Shares in South Korea, China, Hong Kong and Malaysia rose in broad gains for the region. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 0.2 percent.

Japan's Nikkei <.N225> climbed 1.2 percent as the market had an opportunity to gauge how U.S. equities responded to Friday's much weaker-than-expected non-farm payrolls.

"How the U.S. market would react to the weak jobs data was of concern to investors," said Nobuhiko Kuramochi, a strategist at Mizuho Securities in Tokyo.

"The market is relieved on views that the Fed will not likely raise interest rates while the economy is seen still fragile."

Wall Street shares rose overnight as the disappointing jobs data fed expectations that the Federal Reserve could wait longer before raising interest rates. The U.S. stock market was closed on Friday, when the closely-followed data was released.

In currencies, the euro inched up 0.2 percent to $1.9450 , after climbing down from an overnight high of $1.1036. The dollar was steady at 119.56 yen after bouncing from a low of 118.80 on Monday.

A spike in U.S. Treasury yields buoyed the dollar. The 10-year yield jumped overnight from two-month lows and was back at a level prior to the weak non-farm data release. The benchmark note last yielded around 1.90 percent .

"It is important to look at the unemployment rate, which remained unchanged and earnings, which increased last month. The moves in the financial markets tell us that equity, bond and FX traders share our view and we expect the dollar to avoid further losses this week," Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note.

In commodities, crude oil dipped, giving back some of the large gains made overnight when the market reassessed how quickly Iran might increase exports after a preliminary nuclear deal. [O/R]

U.S. crude was down 0.7 percent at $51.76 a barrel after rallying 6 percent on Monday. Brent shed 0.9 percent to $57.62 a barrel following its 5.7 percent jump.

Gold retreated from a seven-week top as the dollar rebounded. Spot gold was flat at $1,213.40 an ounce after hitting the seven-week peak of $1,1224.10 on Monday.

(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Kim Coghill)