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* Japan c.bank mulls more monetary easing, but not just yet
* BHP continues to drag down regional index on take-over bid
* Gold just short of its highest level since July
SINGAPORE, Aug 19 Asian stocks rose on Thursday on hopes that a surge in U.S. mortgage applications will shore up a faltering recovery, while the yen hobbled on reports that the central bank was considering steps to contain its export-sapping rise.
The markets were looking for further cues from the weekly U.S. jobless claims and British retail sales due later on Thursday, seeking evidence that an economic recovery was continuing apace.
"The whole world is sort of holding its breath to see what happens especially in the States, if consumption picks up, though you have to wonder if that's a good thing. There are lots of open-ended questions, that's the problem," said Alex Boggis at Aberdeen Asset Management.
U.S. growth slowed in the second quarter, sparking fears the country might suffer a double-dip recession after climbing out of the worst economic slump since the Great Depression.
A jump in mortgage applications with demand for home refinancing at their highest level in 15 months and sales forecast from discounter Target Corp boosted hopes of stronger economic growth, lifting Wall Street overnight.
Shares in Asia outside of Japan .MIAPJ0000PUS picked up the thread, advancing 0.75 percent, helped by demand for consumer stocks reflecting Asia's stronger economic growth compared with other regions. The MSCI ex-Japan sub-index of consumer discretionary stocks was up 1.3 percent, taking its gains for the year to date to nearly 11 percent.
Seoul shares rose for a third straight session on Thursday to end above a key support level as investors snapped up stocks such as Hyundai Motor (005380.KS) and Hynix (000660.KS) on subsiding economic worries.
The Indian bourse also pulled up the MSCI index with shares climbing 0.8 percent to 30-month highs on robust domestic growth and firm global markets.
But traders said the market was vulnerable to a correction with valuations running high, even though the economy, Asia's third largest, is expected to expand 8.5 percent this year, the fastest pace among major economies after China.
JAPAN OUTPERFORMS, YEN WEIGHS
Japan's benchmark Nikkei .N225 rose 122.14 points to 9,362.68, buoyed by short-covering and bargain-hunting by domestic investors after falls earlier this week, but the yen's overall strength against the dollar capped further gains.
"The Nikkei remains at a precarious level. If U.S. stocks were to slide on some negative news again, the index could easily go below 9,000," said Kenichi Hirano, operating officer at Tachibana Securities.
Investors wait for a meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa.
A newspaper report triggered speculation that the central bank may ease monetary policy further ahead of the meeting, which is expected to take place on Monday.
However, sources familiar with the BOJ's thinking later said the central bank was lining up its options for its policy meeting early next month, but was in no rush to act now. [ID:nTOE67H06U]
The most likely option under consideration is expanding the BOJ's fund-supply tool introduced in December, Japan's Sankei newspaper said, without citing sources. The December move helped push down money market rates and subsequently weaken the yen after it hit a 14-year high.
The dollar, appeared to draw some strength from the newspaper report, edging up 0.3 percent to 85.74 yen JPY=, pulling away from a 15-year low of 84.72 hit last week.
The euro slipped after a report on the website of German newspaper Der Spiegel that austerity steps to fix Greece's debt problems are damaging its economy, but falls in the euro were seen limited as the report provided few fresh insights. [ID:nTOE67I00Q]
The euro fell 0.4 percent to $1.2805 EUR= and support for it is seen at the 100-day moving average of $1.2776, while rises could be capped around $1.2900, said a trader at a Japanese bank. The Australian dollar drifted lower on Thursday, as some market players saw uncertainty over the country's election as an excuse to sell into recent gains amid cautious support for risky trades as equities struggled.
Oil was under pressure on Thursday from a stronger dollar and brimming U.S. petroleum inventories, after prices rebounded from a six-week low a day earlier with rising stock markets. U.S. crude for September CLc1 dipped 11 cents to $75.31 a barrel, after touching $73.83 on Wednesday, the lowest price since July 7.
U.S. commercial crude and product inventories rose last week to the highest level since the U.S. government began tracking weekly data, statistics showed, a sign fuel supply is outpacing demand amid a slow U.S. economic recovery.
Gold gained on Thursday after holdings in SPDR Gold Trust (GLD.P) rose again, showing that the safe-haven appeal of the metal remained intact amid volatile equities markets.
Spot gold XAU= added $1.35 an ounce to $1,228.90 an ounce by 0052 GMT. It had rallied to $1,232.35 an ounce on Wednesday, its strongest since early July, on technical buying and strong physical demand.
(Additional reporting by Kaori Kaneko in Tokyo; Editing by Tomasz Janowski)
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