Asia stocks rally as risk sought

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks and currencies rose on Monday as investors bet that a surge in the U.S. unemployment rate to a 26-1/2-year high would force policymakers to keep many stimulus measures in place until an economic recovery was on more solid footing.

U.S. stock futures edged up while U.S. Treasuries sagged ahead of $81 billion (48.5 billion pound) worth of new supply this week.

The message of status quo was well reflected in markets with U.S. job market contraction remaining near a trend rate and G20 finance leaders ending a weekend meeting without any concrete proposals to rebalance the global economy.

That meant the winner will be asset prices.

"On the one hand, as long as the recovery is not strong enough, central banks will keep on supporting liquidity and asset prices may benefit," said Sebastien Barbe, strategist with Calyon in Hong Kong.

"On the other, central banks may begin to tighten monetary conditions in coming quarters, but only when economic growth has gained sufficient momentum and sustainability, and this restored economic strength may also to some extent support asset prices despite central bank tightening," Barbe said in a note.

The MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS rose 1.3 percent, having risen about 5 percent since hitting a one-month low a week ago.

The materials sector was the biggest outperformer followed by financials. Telecommunications and utilities, traditional defensive plays, were laggards.