Asian shares shrug off losses as China rallies

TOKYO (Reuters) - Asian shares shrugged off early losses on Tuesday, as surging Chinese shares and Wall Street's record close offset continuing worries over Greece's fiscal woes.

Fears of a Greek bankruptcy persisted even as the country's labor minister on Tuesday said Athens would soon conclude a cash-for-reform deal with its lenders.

The cheer was expected to continue in Europe, where financial spreadbetters expected Britain's FTSE 100 <.FTSE> to open up by 12-13 points, or 0.2 percent higher. Germany's DAX <.GDAXI> was seen opening up by 59 points, or 0.5 percent higher, while France's CAC 40 <.FCHI> was expected to open up by 18 points, or 0.4 percent higher.

"European equities are set to rally his morning off of the back of new highs in the Dow overnight," Jonathan Sudaria, a dealer at Capital Spreads, said in a note.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was up 0.1 percent.

The CSI300 index <.CSI300> surged 3.4 percent and the Shanghai Composite Index <.SSEC> rose 3.0 percent, as investors welcomed Beijing's 2015 guidelines for economic reform that prioritize further opening of the country's capital market and the restructuring of state enterprises.

"You need a vibrant stock market to push forward economic reforms, whether it's about asset securitization or industry consolidation," said Tian Weidong, analyst at Kaiyuan Securities in Xian. "With such a policy backdrop, investors are emboldened to stay in the market."

Japan's Nikkei stock index <.N225> ended up 0.7 percent at a three-week high.

On Monday, both the Dow Jones industrial average <.DJI> and the S&P 500 <.SPX> closed at record highs, the third straight day for the latter, after lackluster economic data raised hopes that the U.S. Federal Reserve would hold off raising interest rates.

The National Association of Home Builders said its index of members' sentiment fell to 54 points in May from 56 in April, short of a forecast increase to 57 among economists polled by Reuters.

U.S. Treasuries sank as stocks gained, and higher yields underpinned the dollar. The yield on benchmark 10-year Treasuries notes stood at 2.221 percent, not far from its U.S. close of 2.228 percent on Monday.

The euro, which jumped to nearly four-month highs against the dollar last week, skidded more than 1 percent on Monday. It was last down about 0.1 percent on the day at $1.1302 .

The dollar was steady on the day against its Japanese counterpart at 119.95 yen .

Expectations of more easing from the Bank of Japan kept the Japanese currency in check. The BOJ is seen expanding its massive stimulus program in October, according to most economists polled by Reuters - even though Governor Haruhiko Kuroda has said there is no need to do so.

The BOJ is likely to stand pat at a policy meeting ending on Friday.

U.S. crude futures edged up after slipping on Monday on the stronger dollar and oversupply concerns triggered by Saudi Arabia's report of its highest exports in nearly a decade. U.S. crude rose about 0.1 percent in Asian trade to $59.48 a barrel, while Brent edged down 0.2 percent to $66.15.

Spot gold fell about 0.2 percent to $1,222.80 an ounce a day after it scaled a three-month high as disappointing U.S. economic data quashed expectations that the Fed would hike interest rates anytime soon.

(Additional reporting by Samuel Shen and Pete Sweeney in Shanghai; Editing by Shri Navaratnam and Richard Borsuk)

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