Bloomberg News

Japanese, Australian Stock Futures Gain on ECB Liquidity Plan

September 15, 2011

Sept. 16 (Bloomberg) -- Japanese and Australian stock futures advanced after the European Central Bank and international policy makers coordinated to lend dollars to banks to help tame the credit crisis.

American depositary receipts of Honda Motor Co., a Japanese carmaker that gets almost 85 percent of its sales abroad, gained 1.7 percent from the closing share price in Tokyo. Those of Mizuho Financial Group Inc., Japan’s No. 3 publicly traded bank, rose 1.5 percent after the Nikkei newspaper reported the lender will complete a unit merger in the first half of fiscal 2013. ADRs of BHP Billiton Ltd., the world’s biggest mining company and Australia’s No. 1 oil producer, added 1.3 percent after crude and metals prices rose.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,730 in Chicago yesterday compared with 8,600 in Osaka, Japan. They were bid in the pre-market at 8,720 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index gained 1.1 percent today. New Zealand’s NZX 50 Index added 0.7 percent in Wellington.

“This is akin to a lender-of-last-resort-type facility for banks that increases their flexibility to deal with any potential funding gap,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “It’s an additional form of liquidity globally that’s not necessarily a catalyst for global growth but may arrest declines.”

Greece Support

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. In New York, the index advanced for a fourth day, rising 1.7 percent yesterday, as the European Central Bank and international policy makers coordinated to lend dollars to banks to tame the credit crisis, offsetting concern spurred by signs unemployment is worsening in the U.S.

The Frankfurt-based ECB said it coordinated with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to extend three-month loans to euro-area banks in an effort to ensure they have enough cash for the rest of the year.

The euro appreciated to as high as 106.99 yen last night in Tokyo, compared with 105.29 at the close of stock trading yesterday, boosting the value of some overseas income at Japanese companies when repatriated.

In the U.S., a report showed industrial production unexpectedly rose in August. That helped temper concerns about other data pointing to a weakening recovery, including applications for U.S. unemployment benefits, which rose last week to the highest level since the end of June.

Manufacturing Shrinks

Separate reports showed manufacturing in the New York region contracted at a faster pace in September, while manufacturing in the Philadelphia region shrank for a second straight month.

Crude oil for October delivery rose 0.6 percent to settle at $89.40 a barrel in New York yesterday. The London Metal Exchange Index of prices for six metals including copper and aluminum advanced 1.2 percent, its first gain since Sept. 8.

The MSCI Asia Pacific Index declined 14 percent this year through yesterday, compared with a 3.9 percent drop by the S&P 500 and a 17 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.8 times estimated earnings on average, compared with 12.1 for the S&P 500 and 9.6 times for the Stoxx 600.

--With assistance from Shani Raja in Sydney. 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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