Oil falls helping to lift Asia stocks

By Kevin Plumberg

HONG KONG (Reuters) - Oil prices on Wednesday slid $20 below an all-time high hit two weeks ago, helping to lift Asian stocks and weigh on government bonds as investors cautiously reached for higher returns as well as more risk.

The dollar held gains made the previous session after top U.S. officials, including Treasury Secretary Henry Paulson, gave it a verbal lift.

Crude was down 0.5 percent to $127.82 a barrel after having closed on Tuesday at its lowest since June 5, partly on fears about waning U.S. demand. That has in turn eased immediate concerns about the burden of high energy costs, though soft consumer demand continues to be a worry.

On the earnings front, with the results from some Wall Street banks not as dire as analysts had predicted, investors broadened their focus to other sectors, with announcements on Friday expected from Samsung Electronics Co (005930.KS) and Honda Motor (7267.T).

"We're just seeing a temporary bright patch," said Yoku Ihara, manager of the investment information department at Retela Crea Securities in Japan. "It's still far too early to let down our guard."

Japan's Nikkei share average .N225 rose 1.5 percent to the highest in two weeks. If the index keeps its gains on the day, it will be the first time since April that the Nikkei has had back-to-back gains of at least 1 percent.

Outside of Japan, shares in the Asia-Pacific region .MIAPJ0000PUS climbed 2.3 percent to the highest in three weeks, according to an MSCI index.

Hong Kong's Hang Seng .HSI rose 2.2 percent to a one-month high.