Asia Stocks At 10 - Month High

Asian stocks hit a 10-month high for a seventh day on Tuesday as investors were lifted by improving corporate earnings, though the non-stop pace of the rally caused some to wonder if it was overdone.

The Australian dollar shot to its highest level since last September after the governor of the Reserve Bank of Australia said the central bank does not have to wait for unemployment to peak before raising rates, adding to speculation the next move will be up.

Major European stock markets opened firmer as investors rode the wave of positive sentiment. U.S. stock futures were down 0.2 percent after the S&P 500 closed on Monday at its highest level since November 4.

An abundance of easy money and low bank deposit rates in Asia have been pushing retail investors to shift money from bank accounts to equities, scrambling for higher returns despite increasingly expensive price tags.

"These strong liquidity conditions are pushing Asian equities to stretched valuation levels, in our view. We think a strong recovery in global final demand is now priced in," Henry Hon and Daniel McCormack, strategists with Macquarie in Hong Kong, said in a research note.

They recommended slowly cutting exposure to riskier stocks as prices rise further.

Japan's Nikkei share average edged down just 1.4 points to 10,087.26 after posting a nine-day rising streak, the longest winning run since 1988.

"High-tech shares that had already rallied are pausing for now, and clues to further gains in the overall market will depend on the degree to which investors snap up laggard banking shares," said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.

Valuations have been recovering from depressed levels in Japan. However, on a price-to-book basis, the Nikkei is trading at around 1.3 times compared with the five-year average of 1.8 times, suggesting there may still be pockets of value.

The MSCI index of Asia Pacific stocks outside Japan rose 1.3 percent, racking up a 10-month high.

Gains have sharply outpaced global equity markets, with the regional index up 71 percent since March 9, when share markets began a bullish recovery, compared with a 45 percent gain in the MSCI all-country world index.

Hong Kong's Hang Seng index was trading 1 percent higher in a choppy session, with index heavyweight China Mobile up 3.6 percent.

Investors in mainland China awaited the trading debut on Wednesday of China State Construction Engineering Corp, which with proceeds of $7.3 billion, will be the biggest IPO this year.

The IPO market in China has heated up to the point of increasing fears of a stock market bubble -- only months after the worst of the financial crisis has passed.

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