Bloomberg News

Asia Stocks Climb, Led by Banks, as Europe Seeks Crisis Solution

September 26, 2011

Sept. 27 (Bloomberg) -- Asian stocks rebounded from their lowest level since May 2010 after two days of gains in U.S. equities amid optimism that European leaders may be closer to agreeing ways to tame the region’s credit crisis.

Sumitomo Mitsui Financial Group Inc., Japan’s No. 2 bank by market value, advanced 3 percent in Tokyo after the European Central Bank was said to be considering restarting covered-bond purchases and further measures to ease monetary conditions. Canon Inc., the camera maker which depends on Europe for about a third of its sales, rose 1.9 percent. BHP Billiton Ltd., the world’s biggest mining company and Australia’s largest oil producer, jumped 2.3 percent in Sydney after crude and copper prices advanced.

“There’s no doubt the markets are very oversold,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “There’s a good potential for a bounce and it then becomes about what follow-through reaction we see from Europe. The real issue is whether it’s a durable bounce or whether it’s a dead cat bounce.”

The MSCI Asia Pacific Index climbed 2.5 percent to 111.74 as of 10:24 a.m. in Tokyo, its first advance in four days. A measure of financial companies included in the index rose for the first time in seven days.

Japan’s Nikkei 225 Stock Average rose 1.8 percent in Tokyo. South Korea’s Kospi Index jumped 3.3 percent. Australia’s S&P/ASX 200 Index gained 2.5 percent in Sydney. New Zealand’s NZX 50 Index added 1.4 percent in Wellington.

The Asia-Pacific measure slumped 7.1 percent last week, the most in almost three years, as concern grew that the global economy is heading for a recession. The declines drove the index into a so-called bear market after falling more than 20 percent from a May 2 high.

Interest Rates

Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. In New York, the index climbed 2.3 percent yesterday after a euro-region central bank official said ECB policy makers are likely to discuss next week the possibility resuming buying bonds from banks that are backed by loans as collateral.

The reintroduction of 12-month loans to banks will also be discussed at the ECB’s Oct. 6 policy meeting, said the person, who spoke on condition of anonymity because the information is confidential. Interest-rate cuts are likely to be discussed, though they are not on the agenda, the official said. A spokesman for the Frankfurt-based ECB declined to comment.

The MSCI Asia Pacific Index declined 21 percent this year through Sept. 26, compared with a 7.5 percent drop by the S&P 500 and a 20 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.1 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.2 times for the Stoxx 600.

--With assistance from Norie Kuboyama and Masaaki Iwamoto in Tokyo. Editor: Nick Gentle

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

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


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