GLOBAL MARKETS-Stocks rally on earnings, Obama relief

* Stocks rebound as Obama moderates tone on US bank laws

* Tech shares also help lead Asia higher on upgrades

* Euro drops below $1.3940 then recovers to $1.4000

* U.S. bond yields creep higher as stocks climb

* Toyota tumbles 4 pct as it halts most U.S.-Canada sales (Adds European outlook)

By Kevin Plumberg

HONG KONG, Jan 28 (Reuters) - Asian equities rose on Thursday, snapping a nine-day decline, led by upbeat earnings expectations and a relief rally in U.S. stock futures after U.S. President Obama appeared to moderate his tone on bank restrictions.

European stock futures were up 1.6 percent, indicating investor appetite to snap up recently beaten-down shares after Obama's State of the Union speech.

In another positive development for risk taking, technology shares, which had been leading the broader Asian market lower in recent sessions, reversed course and were up 2.2 percent across the region, supported by robust profit outlooks.

The euro fell to a low below $1.3940 before cutting losses on the day to $1.4012. In the last two weeks, fears over Greece's deteriorating fiscal health have been a dead weight on the euro, contributing to a 5 cent decline.

"There seems to be relief in the market that he (Obama) has not made strong remarks about the bank regulation plan. But we need to continue to watch how that pans out," said Ayako Sera, market strategist for Sumitomo Trust and Banking in Tokyo.

Obama's announcement last week that he planned tough new measures which could break up big banks had prompted heavy selling of financial shares as investors feared it would slash their profits and spell a far more intrusive U.S. government approach to business.

On Wednesday night, Obama pushed jobs creation to the top of his agenda in his State of the Union address and said he would work to dig the country out out a "massive fiscal hole".

He still pledged to slap tough new regulation on Wall Street but said he was "not interested in punishing banks", which helped boost U.S. stock futures and Asian shares by appearing to retreat slightly from some of his recent fiery rhetoric. [ID:nN28160833]

U.S. stock futures rose as much as 0.7 percent in after-hours trade after Obama's speech, adding to modest gains on Wall Street overnight after the U.S. Federal Reserve pledged to keep interest rates near zero and offered a more guardedly optimistic view of the economy than it had previously. [.N]

Japan's Nikkei share average <.N225> finished 1.6 percent higher, helped by reports of robust earnings growth from Honda Motor Co <7267.T>, whose stock jumped 3.3 percent.

But Honda's key competitor Toyota Motor Co <7203.T> saw its shares slump 4 percent after it suspended U.S. sales of some of its best-selling vehicles because of safety issues. Toyota shares have lost 13 percent of their value over the past week as the automaker announced a series of recalls that have tarnished its reputation and emboldened its rivals. [ID:nN2753594]

South Korea's Hyndai Motor <005380.KS> saw its stock rise 4 percent after it posted a record high quarterly operating profit and as investors hoped it may gain market share on Toyota's troubles. [ID:nTOE60N00Q]

The MSCI index of Asia Pacific stocks outside Japan rose 1.6 percent <.MIAPJ0000PUS> though was still down 4.5 percent so far in January.

The tech sector <.MIAPJIT00PUS> provided the biggest support to the index, rising 2.2 percent.

Technology has seen the biggest upgrades in earnings estimates of any other segment over the last 30 days, up 4.6 percent, while valuations have actually contracted in the period amid a global equity retreat.

See this link for more details on tech upgrades: http://www.trpropresearch.com/docs/EarningsAggregatesAsia/TRPR_ 14300_12.pdf/

CURRENCIES

The rebound in equity markets contributed to more confidence about taking risks in currency markets, benefiting emerging market currencies as well as the Australian dollar.

The Australian currency was up 0.7 percent at US$0.9010 .

The U.S. dollar had a roller-coaster session, briefly rising to a six-month high against the euro and then slashing gains to trade flat on the day against major currencies <.DXY>.

The rise in S&P stock futures also dragged up U.S. Treasury yields further.

Shorter-maturity yields shot higher on Wednesday after a Federal Reserve policy meeting, in which one hawkish Fed member surprisingly dissented to a decision to keep a phrase from a statement saying rates would be kept low for an "extended period." [ID:nN27180815]

The yield on the 2-year U.S. Treasury note was at 0.9430 percent, up more than 2 basis points from late Wednesday in New York trade.

The spread of the benchmark 2-year euro zone government bond yield over the 2-year U.S. yield narrowed to 20 basis points, the smallest so far in January, after dropping 6 basis points on Wednesday.

That indicated there is an increasingly small incentive to hold euros instead of dollars.

The stronger U.S. dollar weighed on raw materials prices.

Copper traded in Shanghai was down 3 percent , after three-month copper on the London Metal Exchange dropped around 4.7 percent on Wednesday.

Oil prices rose 0.3 percent to just under $74 a barrel. (Additional reporting by Satomi Noguchi in TOKYO) (Editing by Kim Coghill)