Asian shares at 3-month peak, warily watching oil

* Commodity prices hold gains as dollar suffers sudden retreat

* Asian share markets advance in wake of Wall St jump

* Bond yields higher as deflationary fears ebb

By Wayne Cole

SYDNEY, Feb 4 (Reuters) – Asian shares took Wall Street’s lead to reach three-month peaks on Wednesday as revived risk sentiment dented the U.S. dollar and sovereign bonds, though it was unclear how long this latest mood swing would last.

Much might depend on whether oil can sustain its recent rally, thus helping to underpin energy stocks and lessen fears of global deflation.

So far on Wednesday, oil prices were down only modestly with bulls seemingly hopeful that industry cuts to investment would lessen the glut of supply in the market.

Benchmark Brent crude oil was off a slim 15 cents at $57.76, following a rise of almost 6 percent on Tuesday. U.S. crude was quoted 66 cents lower at $52.39, but that compares with a low last week of $43.58.

In share markets, the Nikkei jumped 1.8 percent as banks outperformed on strong earnings from Mitsubishi UFJ Financial Group.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5 percent to the highest since late October. Australia’s main share index climbed 1.2 percent to a near seven-year top as bulls basked in the glow of Tuesday’s cut in domestic interest rates.

Shares in Shanghai firmed 0.35 percent amid speculation that China’s central bank would be the next to ease policy following moves in Australia and Singapore.

A survey suggesting China’s services sector grew at the slowest pace in six months in January only added to the expectations of more stimulus.

One newspaper reported 14 Chinese provinces planned to invest 15 trillion yuan ($2.4 trillion) in infrastructure and other projects to help revive growth.

Earlier on Wall Street, the Dow had ended Tuesday 1.76 percent higher, while the S&P 500 gained 1.44 percent and the Nasdaq 1.09 percent.

Greek markets had led the way in Europe on hopes that progress was being made in the stand-off over the country’s debt mountain.

Still, it was far from certain whether Greece’s proposed debt-swap plan would get anywhere with euro zone officials giving it a chilly reception.

The improvement in risk sentiment was enough to trigger a selloff in Treasuries, where yields on 10-year paper hit 1.81 percent after the biggest daily rise in 14 months.

Market positioning exaggerated the moves as investors have been very short on oil and very long on dollars and bonds.

The U.S. dollar regained just a little ground on Wednesday, with its index edging up 0.13 percent to 93.716. On Tuesday it had suffered its biggest one-day fall since Oct 2013.

The euro was hovering at $1.1467, after an eye watering reversal from Tuesday’s low of $1.1312. The dollar fared better on the safe-haven yen, rising to 117.77.