(Repeats to additional subscribers with no changes to text) (Adds Europe opening, JGB drop, updates prices)

By Tom Miles

HONG KONG, May 16 (Reuters) - Asian stocks rose cautiously on Friday as the dollar steadied against the yen, oil prices hovered below record highs and government bonds prices slipped.

Most stock markets across Asia were modestly higher, but Tokyo slipped while Sydney surged back towards the 6,000 mark, last glimpsed in February, as top miner BHP Billiton (BHP.AX: Quote, Profile, Research) jumped, propelled by speculation of Chinese interest in the firm.

European share markets also headed higher with London's FTSE 100 .FTSE opening up 0.4 percent while Germany's DAX .GDAXI and France's CAC-40 .FCHI started 0.6 percent higher.

Japan's Nikkei average .N225 retreated 0.2 percent while MSCI's index of other Asian stock markets .MIAPJ0000PUS was up 1 percent by 0603 GMT, with Sydney's benchmark closing 0.8 percent higher.

China's demand for commodities such as Australian ore pushed the Baltic Exchange's main sea freight index .BADI to a record high on Thursday, boosting shippers such as Japan's Kawasaki Kisen Kaisha Ltd (9107.T: Quote, Profile, Research), which gained 4 percent.

Japanese government bond prices tumbled after a regular Bank of Japan repurchase operation proved unexpectedly popular, forcing many traders to dump their debt in the market. That knocked 10-year futures 2JGBv1 by as much as half a point and driving the yield JP10YTN=JBTC up to a 7-month high.

U.S. Treasuries [US/] also dipped after a set of weak economic data cast doubt on the building expectations for a Federal Reserve interest rate hike later in the year.