Bloomberg News

Japanese, Australian Stock Futures Gain on Easing European Worry

September 12, 2011

Sept. 13 (Bloomberg) -- Japanese and Australian stock futures gained after a report that China may invest in Italy eased concerns about Europe’s debt crisis.

American depositary receipts of Honda Motor Co., Japan’s No. 2 carmaker by market value, gained 0.6 percent from the closing share price in Tokyo. Those of Canon Inc., a camera maker that gets almost a third of its revenue from Europe, rose 0.3 percent after European Central Bank President Jean-Claude Trichet said central bankers around the world stand ready to support the banking system as the global economy slows. ADRs of BHP Billiton Ltd., Australia’s No. 1 oil producer, jumped 1.7 percent after crude prices advanced.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,515 in Chicago yesterday, compared with 8,480 in Osaka, Japan. They were bid in the pre-market at 8,490 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index rose 1 percent today. New Zealand’s NZX 50 Index rose 0.3 percent in Wellington.

“China has been showing that it doesn’t want a default in Euro countries. So, it may buy government bonds in countries such as Italy,” said Fumiyuki Nakanishi, a strategist at Tokyo- based SMBC Friend Securities Co. “Trichet’s remarks will give the market confidence.”

Futures on the Standard & Poor’s 500 Index rose 0.4 percent today. In New York, the index rebounded 0.7 percent yesterday, reversing losses in the last 90 minutes of trading, after the Financial Times reported that Italy aims to sell “significant” quantities of bonds and stakes in strategic companies to China.

Possible Solution

An Italian government official, who declined to be identified, told Bloomberg News that Italian officials have held talks with Chinese counterparts about potential investment in the euro region’s third-largest economy.

“If China is willing to invest in Italy, maybe that’s the solution,’ Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York, said in a telephone interview. “It introduces a new source of capital that people weren’t considering outside Europe. Maybe the other countries are going to be able to find capital on their own. That’s what we need to see to shore up these countries.”

Also, Trichet yesterday signaled support for the banking system, saying in Basel, Switzerland: “We have the weaponry to provide what is necessary.”

Stocks fell earlier yesterday in New York amid concern Greece is moving closer to a debt default. Moody’s Investors Service may cut the ratings of BNP Paribas SA, Societe Generale SA and Credit Agricole SA this week because of their Greek holdings, two people with knowledge of the matter said.

The MSCI Asia Pacific Index declined 14 percent this year through yesterday, compared with a 7.6 percent drop by the S&P 500 and a 21 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.7 times estimated earnings on average, compared with 11.6 for the S&P 500 and 9.1 times for the Stoxx 600.

Crude oil for October delivery gained 1.1 percent to settle at $88.19 a barrel in New York yesterday.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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