Aussie dollar rallies as risk back in vogue

* Aussie dlr up across the board as risk back on the menu

* Markets focus on less gloomy economic data around globe

* RBNZ cuts 50 bps and vows to keep rates low to late 2010

SYDNEY, April 30 - The Australian dollar held hefty gains on Thursday as hopes the worst of the global recession might have passed lifted regional stock markets, outweighing some poor data at home.

In late trade the Aussie was up at $0.7261 <AUD=D4>, having climbed two cents on Wednesday helped by a string of better global economic data <nTOPMACRO> and a note of optimism from the Federal Reserve [nN29410693].

It also surged over two cents on the kiwi dollar to reach a seven-week high around NZ$1.2860 <AUDNZD=R> after the Reserve Bank of New Zealand (RBNZ) not only cut interest rates by 50 basis points to a record low of 2.5 percent, but vowed to keep them down until late 2010. [ID:nWEL391595]

That took New Zealand rates below Australia's 3 percent, a very rare event that burnishes the Aussie's relative yield attraction.

"This does not happen for long historically, but this time around we expect New Zealand rates to remain lower than Australia's throughout 2009 and into 2010," said Jarrod Kerr, interest rate strategist at CBA. "This supports a spike in the Aussie/Kiwi."

Wednesday's jump left the Aussie within spitting distance of a March peak at NZ$1.2929, and then last year's high of $1.2965.

It also got as high as $0.7302 against the U.S. dollar before profit-taking set in, and now looks well placed to challenge the recent six-month peak around $0.7325.

The greater appetite for risk was reflected in rising equities with the Nikkei <.N225> up 4 percent and the S&P 500 <.SPX> 2 percent. That in turn took some air out of the safe-haven yen, lifting the Aussie to 70.65 yen <AUDJPY=>, from Wednesday's 69.24 and a trough of 66.81 early in the week.

The broad-based bounce in the local dollar recovered all the losses suffered early in the week when fears about swine flu seemed to threaten the global recovery. It also came despite the World Health Organisation raising its threat level to Phase 5 [ID:nN29472619] <nFLU>.

Investors also brushed aside a weak set of domestic economic figures. Credit outstanding rose a meagre 0.1 percent in March, below a forecast 0.3 percent rise, pulled down mainly by a 0.6 percent drop in business credit.

A survey of over 900 firms from National Australia Bank (NAB) found business expectations for the next 12 months at their lowest since the survey began in 1988, forcing many to cut back on investment and hiring intentions.

The improved global mood initially hit Australian bond futures, but the market recovered on thoughts the Reserve Bank of Australia (RBA) might ultimately follow the RBNZ lead and give a specific pledge to keep rates low for an extended period of time.

The RBA holds its monthly policy meeting next week, but few expect it will ease again so soon after this month's cut to a record low of 3.0 percent.

Three-year bond futures <YTTc1> firmed 0.010 points to 96.595, while the 10-year contract <YTCc1> lost 0.005 points to 95.425. ---------------(Snapshot at 4:00 p.m./0600 GMT)----------------- FUTURES CASH YIELD 90-DAY BILL 90-DAY BILL<YBAc1> (JUN) 97.09 (+0.01) <AU3MBB=RR> 3.08 (3.08) 3-YR BOND <YTTc1> (JUN) 96.595(+0.01) <AU3YT=RR> 3.45 (3.46) 10-YR BOND <YTCc1> (JUN) 95.425(-0.005) <AU10YT=RR> 4.76 (4.77) AUD/USD <AUD=> 0.7261 (0.7145) US 10-YR <US10YT=RR> 3.09 (3.01) ---------------------------------------------------------------- AUD VS 2-YR 10-YR *AUD 3-YR/10-YR SPREAD USD +221 (+220) +166 (+175) *FUTURES +1.145(+1.13) CAD +217 (+217) +167 (+171) *AUD 2-YR/10-YR SPREAD NZD -33 (-61) -58 ( -64) *CASH +161 (+161) ---------------------------------------------------------------- For Reuters data on current Australian bond pricing, double-click on <YIELDBROKER>.