Asian stocks up on Wall Street's positive lead, US dollar holds gains

TOKYO (Reuters) - Asian stocks followed a positive lead from Wall Street to rise on Tuesday, while the U.S. dollar held its gains after rebounding against the euro and yen on higher U.S. Treasury yields.

The region's focus fell on the Reserve Bank of Australia's policy decision due later in the session. Expectations are that the central bank would further cut interest rates in the wake of falling prices of iron ore, the country's biggest export.

The prospect of more monetary easing has pushed the Australian dollar to hover around six-year lows while shoring up the country's share prices.

Australian shares added 0.4 per cent, while the Aussie was steady at US$0.7589, not too far from a six-year low of US$0.7534 plumbed last week.

Japan's Nikkei rose 0.7 per cent and South Korea's Kospi climbed 0.5 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat.

Wall Street shares rose overnight as Friday's much weaker-than-expected U.S. non-farm payrolls fed expectations that the Federal Reserve could hold off raising interest rates. The U.S. stock market was closed on Friday, when the closely-followed data was released.

In currencies, the euro was up 0.1 per cent at US$1.9355 , climbing down from an overnight high of US$1.1036. The dollar was steady at 119.495 yen after bouncing from a low of 118.80 on Monday.

A spike in U.S. Treasury yields buoyed the dollar. The 10-year yield jumped overnight from two-month lows and was back at a level prior to the weak non-farm data release. The benchmark note last yielded 1.90 per cent.

In commodities, crude oil dipped, giving back some of the large gains made overnight when the market reassessed how quickly Iran might increase exports after a preliminary nuclear deal.

U.S. crude was down 0.7 per cent at US$51.78 a barrel after rallying 6 per cent on Monday.