* China data underpins gains in Asia stocks
* Oil slips on profit-taking, more U.S. budget battles ahead
* Yen recovers from 29-month low versus U.S. dollar
* S.Korea's Kospi underperforms region as automakers slip
* Australia stocks at 19-mth high, Aussie holds gains
By Vikram Subhedar
HONG KONG, Jan 3 (Reuters) - Most Asian stock markets edged
higher on Thursday on hopes of a steady economic revival in
China, although oil gave back part of the previous session's
strong gains as investors took some money off the table and
braced for more U.S. budget battles.
The MSCI Asia Pacific ex-Japan index of stocks
rose 0.2 percent following Wednesday's 2 percent
jump on relief that U.S. politicians had averted the "fiscal
Data from China showing the services sector expanded in
December continued to underpin expectations of an economic
recovery that has helped spur a strong rally in Hong Kong-listed
Chinese shares over the past month.
The China Enterprises index which rallied more than
4 percent in the previous session eased 0.2 percent. Onshore
Chinese markets will resume trading on Friday.
"China looks like it's improving at the margin and the
market has momentum that could last for at least a few months,"
said Christian Keilland, head of trading at BTIG in Hong Kong.
"Investors seem to have accepted that reforms are underway
but they're going to happen at a slower pace."
Australian stocks rose 0.7 percent to their highest
in more than 19 months, with mining giants Rio Tinto up
2.4 percent and BHP Billiton up 0.8 percent, among the
top gainers on the benchmark S&P ASX/200 index.
South Korea's Kospi underperformed the region,
falling 0.4 percent as automakers and other exporters slumped on
a stronger Korean won, which hit a 16-month high
against the dollar overnight.
In other currency markets, the Japanese yen bounced
after hitting a 29-month low versus the dollar earlier in the
day but analysts warned that any strength is likely to be
"Technically dollar/yen looks somewhat overbought here. It's
gone a long way in a very short time," said Callum Henderson,
global head of FX research for Standard Chartered Bank in
Singapore, adding that the dollar could see some consolidation
in the near term before heading higher.
The euro which in overnight trading was close to a
8-1/2 month high against the dollar, slipped 0.1 percent.
The U.S. dollar rose 0.2 percent against a basket of
President Barack Obama and congressional Republicans face
even bigger budget battles in the next two months after a
hard-fought deal averted the fiscal cliff of automatic
tightening that threatened to push the U.S. into recession.
Strength in the dollar and profit-taking pushed oil prices
lower with Brent crude slipping 0.3 percent and U.S
crude futures down 19 cents to $92.93.
"After the initial excitement, reality sets in," said Victor
Shum, oil consultant at IHS Purvin & Gertz. "There will be other
negotiations and the deal is a compromise."