May 11 (Bloomberg) -- Asian currencies rose, led by the South Korean won and Thai baht, as better-than-expected labor data from the U.S. added to signs that the global economy is on the mend, helping emerging markets attract funds.

The won climbed to its highest level in almost seven months against the dollar and the Thai baht gained before reports this week that may show China’s exports fell at a slower pace and U.S. retail sales stabilized. The MSCI Asia Pacific index of stocks gained for a sixth day after a government report on May 8 showed payrolls in the U.S. shrank in April by the least since October.

“Improved sentiment has led to a massive resurgence in flows to emerging markets, irrespective of the underlying data, which remains weak,” said Dwyfor Evans, a Hong Kong-based currency strategist at State Street Global Markets. “Investors are going out of dollars to riskier markets, riskier currencies. Asia offers a pretty good risk reward.”

The won jumped as much as 1.7 percent to 1,225.97 a dollar, the highest level since Oct. 15, before closing trading at 1,237.80 in Seoul, according to data compiled by Bloomberg. The baht rose 1 percent to 34.54, the biggest gain this year, and reached 34.49, the strongest since December.

Seven of Asia’s 10 most-active currencies excluding the yen advanced after the Labor Department reported payrolls in the U.S. fell by 539,000, fewer than economists forecast, after a 699,000 loss in March.

‘Half-Full’

A government report tomorrow will show China’s exports fell 15.3 percent in April, the smallest decline this year, according to the median estimate in a Bloomberg News survey of economists. A U.S. report the following day will show retail sales in the world’s biggest economy were unchanged, following a 1.2 percent decline in March, a separate survey showed.

“Investors prefer to look at it as a glass half-full, instead of half-empty,” State Street’s Evans said.

Japan’s yen rose to 133.10 per euro versus 134.23 in New York last week. The yen advanced to 97.86 a dollar, compared with 98.47 on May 8.

Taiwan’s dollar climbed to the highest level this year on speculation closer ties with mainland China will boost economic growth and investment flows into the island.

Warming Ties

Chinese Premier Wen Jiabao yesterday called for accelerating development of an economic zone in Fujian province, which faces Taiwan, Xinhua News Agency reported.

“Any positive developments about warming cross-strait relations will continue to inspire portfolio inflows,” said Daniel Soh, an economist at Forecast Pte in Singapore.

The island’s dollar rose 0.5 percent to NT$32.889 against the greenback, according to Taipei Forex Inc. It touched NT$32.821. The currency has rallied 4.9 percent in the past two months.

Some central banks in the region may intervene to prevent stronger currencies from hurting exports, according to State Street’s Evans. Monetary authorities arrange sales or purchases of currencies to influence exchange rates.

“Some currencies, like the Taiwan dollar, have come so far that I’m becoming a bit wary that the move may have been overdone somewhat,” he said.

Elsewhere, the Indonesian rupiah climbed 0.4 percent to 10,331 a dollar and Malaysia’s ringgit traded at 3.5165 after reaching 3.4965, the strongest since Jan. 7. Singapore’s dollar strengthened 0.4 percent to S$1.4598. China’s yuan traded at 6.8235 versus 6.8218 on May 8, while Vietnam’s dong dropped 0.05 percent to 17,783. The Philippine peso fell 0.2 percent, halting a seven-day rally.

To contact the reporters on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.

Last Updated: May 11, 2009 05:02 EDT