GLOBAL MARKETS-Asia stocks extend rally, risk-taking en vogue

* Asia stocks hit 2-mth high after 7 pct S&P surge

* Yen tumbles as carry trades make comeback

HONG KONG, March 24 - Asia stocks pushed up to a two-month peak on Tuesday while higher-yielding currencies jumped against the battered yen as Washington's plan to relieve banks of toxic debt spurred investors to pick up riskier assets.

The gains in major Asian equity markets followed a 7.1 percent surge in the U.S. S&P 500 after data showing a surprise rise in existing home sales, stirring hopes that recovery is taking hold in the battered housing market.

Financial shares extended their rally after investors cheered the U.S. Treasury's plan to free banks of up to $1 trillion in troubled mortgage securities and other loans, part of the array of measures designed to revive lending and jump start the economy.

The revival in investor risk-taking boosted currencies such as the Australian and New Zealand dollars against the yen as carry trades -- borrowing in low-yielding currencies and buying higher-yielding ones -- showed signs of making a comeback.

"The long-awaited U.S. programme is finally out, and that is significant enough to bring some stability to the market," said Minoru Shioiri, chief manager of currency trading at Mitsubishi UFJ Securities in Tokyo. "That means the market is likely to have a bias for a weaker yen."

The MSCI index of Asia-Pacific shares outside Japan climbed 1.6 percent in early trade before most regional markets had opened, taking gains to 28 percent from the five-year low hit last November.

Japan's Nikkei share average was up 2.4 percent to strike a two-month high, even as Japan has lagged the global rebound in stocks due to persistent foreign investor selling.

Safe-haven government bonds succumbed to the global stock rally.

Ten-year Japanese government bond yields edged up a basis point to 1.270 percent, but losses were limited as some investors took advantage of the back-up in yields to buy paper as they eye the start of Japan's new business year in April.

Government bonds have been boosted by central banks taking the extraordinary measure of buying large chunks of debt outright to keep a lid on yields as one means of helping growth with short-term interest rates already near zero.

The dollar slid back towards the two-month low hit against a basket of major currencies last week when investors seized on the Federal Reserve's decision to buy large amounts of Treasuries as a sign of the ongoing erosion of the world's reserve currency.

The dollar index -- a gauge of its performance against six major currencies -- dipped 0.2 percent to 83.280. Among higher-yielding currencies, the Aussie jumped 1.3 percent to hit a 4-½ month high near 69.47 yen.