* MSCI Asia-ex Japan hits 10-mth peak, up 0.4 pct
* Bernanke: policy accommodation needed for "extended period"
* Dollar steady after slide, Aussie dips but near 5-wk high
* Nikkei up 2.7 pct after holiday, Aug. 30 election eyed (Repeats to add dropped word in lead)
By Eric Burroughs
HONG KONG, July 21 (Reuters) - Asian stocks edged up to another 10-month peak on Tuesday after strong company earnings reassured investors that a U.S. economic recovery is taking root, prompting a further shift into riskier assets from the safe-haven dollar.
European markets were set to open higher, with futures on the Dow Jones Eurostoxx 50 up 0.4 percent.
Gains were kept in check as some market players booked profits on the run-up in equities and higher-yielding currencies, knocking the Australian dollar down from a five-week high against the U.S. currency.
Central bankers are starting to sound a note of optimism as well. Minutes from the Reserve Bank of Australia's last meeting in July showed it had become more optimistic about the economic outlook at home and abroad.
But Federal Reserve Chairman Ben Bernanke reassured that loose monetary policy with interest rates near zero would be around for a while longer.
Writing in the Wall Street Journal, Bernanke said the Fed's accommodative policy would be warranted for an extended period even while laying out a roadmap for how the Fed could mop up the massive reserves injected into the financial system. ID:nHKG104311]
Bernanke delivers his twice-yearly testimony to Congress later in the day.
"It doesn't look like he's sounding too anxious or urgent about removing excess stimulus from the system," said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney.
Stocks around the world have gained this month as major banks show more signs of healing from the credit crisis and companies are more confident about demand improving later this year and in 2010.
Analysts said the last-minute deal by CIT Group to secure emergency financing also boosted investor confidence, even as the drama surrounding the struggling U.S. commercial lender has made few waves across markets.
"News of the CIT deal and positive economic data from the United States helped markets start off quite strong," said Lee Sun-yeop, a market analyst at Goodmorning Shinhan Securities in Seoul. "Combined with a positive earnings outlook and growing upward momentum, we are seeing shares hitting a new high for the year."
The MSCI index of Asia-Pacific shares outside Japan edged up 0.4 percent after pushing up to 344.65 in early trade, the highest since late September when equity markets were crumbling after the collapse of U.S. investment bank Lehman Brothers.
So far this year the MSCI benchmark for Asia has risen 39 percent, rebounding from a record 53 percent plunge last year and outperforming developed markets.
Equity indexes were mostly higher across the region. Hong Kong's Hang Seng inching up 0.2 percent and South Korea's KOSPI adding 0.7 percent, but the Shanghai Composite lost 0.7 percent.
On Monday the U.S. S&P 500 climbed 1.1 percent, while brokerage upgrades of technology bellwethers lifted the Nasdaq to a ninth straight daily gain -- the longest winning streak since 1998.
Japan's Nikkei average rose 2.6 percent, getting a lift from the renewed optimism on the economic outlook as the market reopened after a three-day weekend.
In an expected move, Prime Minister Taro Aso dissolved the lower house of parliament and called for an election on Aug. 30. The opposition Democratic Party leads in the polls and is threatening to end a half-century of near-unbroken rule by the Liberal Democratic Party.
The dollar steadied after hitting a six-week low against a basket of major currencies, beaten down as investors have favoured emerging market stocks and bonds over the safety of the U.S. currency.
The dollar index, a gauge of its performance against six major currencies, was little changed at 78.95. The euro was also steady at $1.4210 after shooting higher the previous day. The dollar dipped 0.2 percent to 94.05 yen.
The euro is now poised to make a run at its peaks hit in May around $1.4335, which form a double-top on the charts and should prove tough resistance.
The Australian dollar showed little reaction to RBA meeting minutes but succumbed to profit-taking, losing 0.4 percent to $0.8126.
Bonds were under pressure again as stocks kept adding to gains. The benchmark 10-year Japanese government bond yield rose 4.5 basis points to 1.360 percent, a three-week high.
Treasuries were little changed, keeping the benchmark 10-year yield at 3.599 percent and near a one-month high of 3.722 percent hit on Monday.
(Additional reporting by Jungyoun Park in Seoul, Charlotte Cooper and Elaine Lies in Tokyo)